cash flow

Why Is Cash Flow Important?

Why is Cash Flow important?

Basically, the goals of companies are to make money, to make a profit. Cash is one of the most indispensable items for businesses. In startup companies, 80% of which are established with one or two people, cash is needed when starting the business, operating the business and expanding the business volume. For this reason, problems arise in cash management and business sustainability in many small and medium-sized enterprises.

Incorrect cash flow analysis or lack of cash can adversely affect day-to-day operations and brand strength of companies. 85% of start-up companies meet their initial capital from their own savings or ongoing consultancy business. Our magic number that we will talk about here is 6. 45% of newly established companies close before they see the 6th month. Those who can survive until the 9th month can complete the first year upright.


It is vital for businesses to maintain a balance between cash inflows and outflows, and to keep cash at the optimum level, except in extraordinary circumstances. If a good cash flow can be achieved, the resources used for operational activities can be managed correctly and can be a solution for possible future problems. It is obvious that companies that make cash flow based on detailed analysis will be more advantageous than their competitors.

Cash Flow, that is, cash flow is the changes that have occurred in the cash situation of the company between two certain periods. Reports are prepared on how the company obtains cash in the areas it serves and what is done with the cash provided. Thanks to these reports, companies can see the amount of cash they have at the beginning and end of the specified period.

Calculating future cash needs is extremely easy. Estimated cash needs can be calculated based on the flow of cash into and out of the business.

Operating Cash Requirement  = Cash to be Collected from Firm Operations and Customers – (Operating Expenses + Cash Payable to Providers of Goods and Services)


There are some moves and precautions that need to be taken so that businesses can provide stability and increase cash flow positively. Reports such as a regular inventory count, future payment calculations, made at certain times, provide you with peace of mind, except for extraordinary situations. With a cash plan made at the beginning of each month, you will encounter more optimistic figures. By turning to bulk package services instead of one-time services, you save time and make a positive improvement in cash management. For example; Buying office supplies in bulk from one place provides you with a discount advantage for office needs and saves you time and energy during the research process. Thanks to a simple shopping for office supplies over the Internet, manpower, vehicle and road costs can be saved.


Choosing the right methods in all items that affect the cash flow ensures the sustainability, which is the main purpose of the enterprises, and in this way, basic objectives such as value increase, service to employees and society, and contribution to the country are realized.