Page 51 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
determining and assessing the protability levels. The
majority (56%) of the respondent rms have agreed that
cash budget plays a vital role in predicting cash ows.
The majority (56%) of the respondent rms have shown
their agreement to the usefulness of cash budgeting in
managing expenditure as it gives clear picture of cash
inows and outows and cash balances. The majority
(46%) of the respondent rms have agreed to the fact that
cash budget helps in assessing the short-term nancial
needs and 51% have shown their agreement to
usefulness of the cash budget in resource utilization. The
majority (56%) of the respondents are strongly agreed
that cash budgeting is very useful for nancial planning
for an organisation. The majority (34%) of the respondent
rms had shown their strong agreement to the fact that
cash budget helps in managing the nancial obligations.
The statistical analysis has validated that the majority of
the respondents are agreed to the same.

Cash Flow Management
Cash is the lifeline of any business. Businesses in the
MSME sector face major issues related to the liquidity
crunch. While arranging the long-term capital is
difcult, arranging working capital to run the operating
cycle of a business is no easy task. Banks and nancial
institutions are not very keen on lending to MSME for
working capital requirements, since the asset value to
back the lending may not be sufcient to cover the risk
faced by the lenders. Hence it becomes imperative to use
the cash available in the most prudent manner.
Cash Flow management involves, arranging the money
when needed, prioritizing among the problems needing
cash, monitoring appropriate use of cash, Reinvestment
of any surplus cash, creating a reserve to meet
contingencies. Cash Flow management involves