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Table of contents

What is cash flow?

Cash flow refers to the movement of money in and out of a business. It's a crucial measure of a company's financial health, indicating whether your company can generate enough revenue to cover its operating expenses

Positive cash flow means that your business has more money coming in than going out, allowing it to pay bills, invest in growth, and provide a buffer against financial challenges. Negative cash flow, on the other hand, can signal financial trouble, making it difficult to sustain operations without external funding. Effective cash flow management is essential for making sure a business can meet its short-term obligations and plan for long-term growth.

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What is a cash flow loan?
A cash flow loan is a type of short-term borrowing typically used to finance working capital needs, such as paying suppliers or covering payroll, until a company's cash flow improves. Cash flow loans are usually unsecured, meaning they don't require collateral, and are based on the borrower's projected cash flow and creditworthiness.

How can I use a business credit card to manage cash flow?

Smooth out cash flow gaps

Using credit cards can help smooth out cash flow gaps by providing immediate access to funds when revenue is delayed or expenses are higher than anticipated. This can prevent disruptions in operations and allow businesses to meet their financial obligations on time.

Track and categorize expenses

Most business credit cards offer detailed reporting and categorization of expenses. This can help businesses monitor their spending, identify cost-saving opportunities, and make more informed financial decisions. Effective tracking also simplifies accounting and tax preparation.

Earn rewards and cashback

Many business credit cards offer rewards programs that provide points, cashback or miles on purchases. These rewards can be used to offset business expenses, reducing overall costs and improving cash flow. Some cards also offer sign-up bonuses, which can provide an additional financial boost.

Improve credit score

Using a business credit card responsibly by making timely payments can help improve your company's credit score. A higher credit score can lead to better financing terms and access to larger lines of credit in the future, providing more flexibility in managing cash flow.

Access to credit during emergencies

Business credit cards can serve as a financial safety net during emergencies or unexpected expenses. Having access to a line of credit ensures that a business can handle sudden financial needs without resorting to more expensive or less flexible borrowing options.

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Is too much cash flow bad?
Too much cash flow is generally not a problem. However, if your small business has excessive cash flow, it may indicate that you’re not reinvesting enough in growth opportunities or capital improvements. It's crucial to find a middle ground between keeping sufficient cash reserves and efficiently using funds to encourage growth and innovation.

Manage cash flow with a Ramp corporate card

The Ramp Corporate Card is designed to help businesses streamline their cash flow management. With real-time expense tracking and automated categorization, Ramp provides detailed insights into spending patterns, helping your business identify areas for cost savings. 

Ramp's integrations with accounting software also simplify bookkeeping and ensure accurate financial reporting. By using Ramp, your business can gain better control over its finances, making it easier to navigate cash flow challenges and focus on growth.

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Finance Writer and Editor, Ramp
Ali Mercieca is a Finance Writer and Content Editor at Ramp. Prior to Ramp, she worked with Robinhood on the editorial strategy for their financial literacy articles and with Nearside, an online banking platform, overseeing their banking and finance blog. Ali holds a B.A. in Psychology and Philosophy from York University and can be found writing about editorial content strategy and SEO on her Substack.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.

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