As part of Maestro’s Entrepreneur Center’s Webinar Wednesday Series, Hugh Stevens, executive director of the Harvey E. Najim Innovation and Career Advancement Center at UTSA and board member of Maestro, gave a lecture on the importance of cash flow.

Fundamentally, cash inflow and outflow rely on many factors, but are a crucial part of a businesses finances.

Cash flow consists of three parts: operating activities (cash received from revenue), investing activities (sale of operational assets, sale of investments, and collections of loans), and financing activities (issuance of stock and issuance of bonds and notes).

“For me, I’m gonna focus on operating activity because that is my relationship with my employees and customers,” Stevens said.

However, he notes that the other two parts are just as crucial but are more managed by his accountant rather than himself.

Operating activities is the element of cash flow that focuses on the cash that you make and spend on a day-to-day basis. Going further into detail, it is the money you generate from product sales as well as from interest and dividends. It also encompasses the money spent on employee salaries, suppliers of goods, interests of debt, and income taxes.

Business owners are probably familiar with the Statement of Cash Flows. If not, it is simply a statement that will help you assess your business’s ability to generate cash and your ability to meet its obligations. For Stevens, the statement of cash flows allows him to make short-term decisions that will lead to long-term decisions. Not only does this statement list all cash inflows and cash outflows for operating expenses, but it also covers investing and financing activities as well.

Cash flow can tell every business owner where the business is at in any point in time, including the present. When the market changes, cash flow can direct business movements and say whether or not a business needs to be more willing to adapt to the current climate and make adjustments to how your business needs to
be run.

Webinar host Juanita Sepulveda posed a question to Stevens concerning what element was important to keep an eye on in the statement of cash flow. In which Stevens said opportunity costs while relaying his own personal experience with his business pursuits.

For deeper insight, check out the full webinar here: https://www.youtube.com/watch?v=Ek-9L1uJpTA&t=975s