What is usually a result of effective cash flow management?

Effective cash flow management plays a crucial role in enhancing a company's financial health by ensuring that cash inflows and outflows are well balanced. When a business effectively manages its cash flow, it can predict its revenue more accurately. This is because a clear understanding of cash flow allows the business to anticipate future cash needs and adjust operations accordingly, reducing the likelihood of cash shortfalls and enabling better forecasting of incoming cash from sales, receivables, and other sources.

Additionally, improved cash flow management facilitates timely investment in opportunities and makes it easier to handle unexpected expenses, further solidifying revenue predictability. By having a clear picture of cash availability, companies can make informed decisions regarding their operations and strategic direction. This leads to more stable revenue streams since the company can operate smoothly without interruptions caused by cash shortages.

While higher profit distribution, lower staff requirements, or reduced operational costs may also result from sound financial practices, they are not direct consequences of effective cash flow management in the same way that revenue predictability is achieved. Hence, increased revenue predictability is the most logical outcome of effective cash flow management.