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Cash Flow
- Cash is vital for a business and
for its sucess.
- Cash is not just notes and coins. It
is also money in the bank.
- Cash flow is the flow of money
going in and out of a business.
- Inflows are the cash coming into the business,
such as: Putting your own money into the
busimess, loans from the band and cash from
sales
- Outflows are the cash going put of a business
such as: Wages, Equipment, Telephone, gas and
electricity bills and rent for other bills. Also
interest in loans and advertisments costs.
- Inflows are the reciepts of a business- the
money it recieves.
- Outflows are the payments of the business to others.
- Importance of cash flow: Without cash in a business it wouldn't get anywwhere. If there was no
cash she wouldn't be able to pay bills. Not paying billls will have you taken to court by your
creditors, the people you owe the money to. This will to recover money thats owed. However by
the time the business may have failed, as if there was no cash the employees wouldn't get paid
so they would leave. Also suppliers wouldvstop supplying and providing products if they aren't
getting paid. The business would become insolvent
- Cash flow forecast: A cash flow forecast is a prediction of
how cash will flow in and out of the business in future.
Businesses use cash flow forecasts: To see how wel they
should be performing in the near future: cash flow forecats
are part of a business plan. They also use cash flow forcats
to see id actions need to be taken to avoid cash crisis and to
tale to the bank if the business needs a loan to cover a
shortage of cash.
- Things that affect cash flow are: Sales change, costs change and
credit term change.
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