Cash Flow Management Based On Value Chain

Traditional cash flow management concerns within the enterprise other than information of the suppliers, distributors and competitors. Therefore, cash flow decisions are optimal from the point of the enterprise while not optimal to the whole value chain. Cash flow management based on value chain manages cash flow from an overall view. It saves transaction cost and increases efficiency of cash flow use through expanding the managing scope of cash flow.The paper defines cash flow management based on value chain first. By ways of integrating value chain management and modern information technology, making full use of the latest management measures, it allocates cash flow to different value chain node reasonably. Thus, it is a strategic management which leads to cash flow optimization and further contributes to the enterprise value maximization. The objectives are cash flow maximization, safety and coordination. It is characterized in value creation, conception novelty and a wide range of research. Secondly, the paper discusses cash flow management from supply side of value chain which includes three parts:supplier alliances to manage cash flow collaboratively; value chain financing based on prepayments and reasonable arrangements for the supply-side funding to create value.Thirdly, the paper analyses cash flow management from sales side of value chain which also includes three parts:establish customer alliances to collaboratively management of cash flow;value chain financing based on accounts receivable; value sharing from strategic management of cash flow. rational use of funds selling side of the value chain to create value.fourthly,the paper discusses cash flow management from the internal value chain,which contains three parts:the internal value chain and cash flow management;the influences of corporate life cycle on the cash flow management of the value chain; the influences of corporate size on the cash flow management of the value chain.Finally, the paper summarizes the whole thesis.Value chain management provides us a new research perspective. With development of value chain theory and its utilization in enterprises, the methods of cash flow management to maximize enterprise value added will be more mature.