The Due Process of Cash Flow Statements Management for Business Managers and Investors

In today’s world of global economic and financial crisis, it is a fact that one of the priorities for today’s economic climate is the effective and efficient management of cash flows. Business analysts have identified poor cash flow management as the main reason for business failure for entrepreneurs, managers, and investors. Companies sometimes engage in unusual or aggressive accounting practices in order to flatter their reported figures, especially earnings. In the wake of recent high-profile scandals, the landscape is beginning to change. As a result, some investors now shun reported earnings and focus more attention on other metrics such as cash flow statements to evaluate the operational health of a business. Analyzing the operating cycle and forecasting cash needs will minimize the amount that must be financed without running short of cash. This paper gives an incisive and in-depth understanding of cash flow statement management, its planning, elements, and significance. It offers strategies on best practices for managing liquidity crisis in a slow down economy. It finds that management of cash flow statements is a basic practice needed in a healthy business and that business leaders/managers must develop this skill to manage finances and avoid trouble. This basic skill must however be applied according to certain financial controls to ensure integrity in the bookkeeping process. The paper concludes that smart cash flow decisions are paramount to survive the current unstable economic dispensation. Hence, it recommends that businesses and investors need the cash flow management expertise to battle the current economic meltdown environment which is characterized by tightening finances, rising inflation, general depression, and increased supply chain risk