Short-term financial management is the practice of managing a company's financial resources over a short period of time, typically one year or less. It entails making judgments and acting in order to maximize cash flow, working capital, and liquidity in order to meet the company's immediate financial obligations. Here are some important components and strategies for short-term financial management:

1.Cash Flow Management: Cash flow is critical for a business's day-to-day operations. Monitoring and predicting financial inflows and expenditures to ensure there is enough cash on hand to cover expenses is part of effective cash flow management. Optimizing invoicing and collections, negotiating favorable payment terms with suppliers, and maintaining inventory levels to reduce carrying costs are all strategies.

2. Working Capital Management : Working capital is defined as the difference between a company's current assets (cash, accounts receivable, and inventory) and current liabilities (accounts payable and short-term debt). Efficient working capital management seeks to strike a balance between these components in order to ensure smooth operations. This covers tactics like as inventory optimization, account receivable and payable management, and negotiating favorable credit terms with suppliers.

3.Short-Term borrowing: Companies frequently require short-term borrowing to bridge temporary cash flow shortages or fund working capital requirements. Bank loans, lines of credit, trade credit, and factoring are all typical sources of short-term funding. When deciding on the best source of financing, the cost, conditions, and impact on cash flow should all be carefully considered.

4.Cash conversion cycle :

The cash conversion cycle (CCC) is the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A corporation can optimize its working capital and boost liquidity by lowering its CCC. Reduce inventory holding times, streamline the sales and collection process, and negotiate favorable payment terms with suppliers to achieve this.

5.Budgeting and forecasting: It is critical for good financial management to create accurate short-term budgets and forecasts. Estimating revenues and expenses, anticipating financial flows, and recognizing potential funding shortages or surpluses are all part of the process. Monitoring actual performance versus the budget on a regular basis enables for timely adjustments and identifies opportunities for improvement.

6.Risk Management: In addition to addressing potential risks that could jeopardize the company's financial stability, short-term financial management should address them. Risks connected with interest rate swings, foreign exchange exposure, credit risk, and liquidity risk are all assessed and managed. Creating contingency planning and keeping appropriate reserves on hand might help to mitigate potential financial concerns.

Remember that precise tactics and approaches to short-term financial management may differ depending on the industry, company size, and unique circumstances. To adjust these concepts to your specific business needs, it's always a good idea to contact with financial specialists or experts.