CHAPTER 8 Cash Flow Management

Martie Gillen, PhD

University of Florida

Michael Gutter, PhD

University of Florida



Cash flow management is a fundamental aspect of financial planning. Therefore, cash flow management connects to all areas of financial planning. The construction of financial statements provides a foundation for identifying opportunities and challenges related to a client’s cash inflows and outflows. The financial planner can use this information to help clients develop a plan for reaching long-term financial goals such as planning for education, special circumstances, and retirement. Financing strategies may be utilized to aid the client in reaching goals such as buying a home. Cash inflows and outflows play an important role in determining whether obtaining new debt is the best alternative, including the debt level. Time value of money (TVM) is an important financial planning concept and includes calculations needed to assist with financial goal planning. TVM can be used by the financial planner to help a client compare alternatives among investments, loans, mortgages, leases, savings, and annuities. The financial planner should communicate recommendations to assist clients in meeting their current financial needs and long-term financial goals, including the need for liquid assets and emergency funds, as well as recommending strategies for accumulating ...

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