Guide to cash
flow & budgeting
in Hong Kong
We explain what cash flow and budgeting mean, what the government expects from you, and how to organise these processes
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What is cash flow?
Cash flow, defined, is the amount of cash or its equivalent that is being transferred in and out of business. A cash flow is positive if a company has more liquid cash coming in rather than going out. It’s a show of the company’s robust financial health.
The financial means of any business are distributed across many areas — for example, its assets, outstanding invoices, and investments. Therefore, one of the surest ways to determine a company’s financial performance is by checking its cash flow statements.
What is budgeting?
A business budget is the financial plan of the company. It is an adjunct to the overall business plan, which lays out, in numbers, what the company hopes to achieve that year in terms of money. It contains detailed and data-backed forecasts of a company’s annual projected sales, profits, revenue, and expenses.
Why is positive cash flow important?
More cash in hand allows companies to settle their debts, pay shareholders and expenses, and invest in business growth. Therefore, every business must be diligent about recording and tracking its cash flow. Bills, expenses, invoices, instalments, premiums, or incoming payments — big or small — must all be appropriately tracked. Most companies use automated or freelance accounting services in Hong Kong to monitor and manage their cash flow.
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