Improving Cashflow
- Created by: Sumtimesadness
- Created on: 28-02-14 10:16
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Cash flow= the movement of cash into and out of a business' bank account
Cash flow forecast= is a plan showing all expected cash recipets
Net cash flow= cash inflows- cash outflows
Cash flow forecasting is the management of short term cash to ensure liquidity
Liquidity- is the ability to meet short term obligations
Why do businesses use cash flow forecasts?
- plan to see how much cash is flowing in and out
- ensures the business reaches short term debts
- foresee any problems arrange an overdraft
- cash pays the bills profit doesnt
- show investors
Causes of cashflow problems
- unforeseen costs
- seasonal demand
- changes in tastes
- customers pay on credit
- changes in external environment
- lower sales than expected
- poor stock management
- suppliers give short credit
- over optimstic cashflow
- overtrading
- poor market research means sale revenue figures are inaccurate
- management errors
- no previous trading record
methods of improving cashflow
- improve sales by…
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