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What is cash?
· Cash is notes, coins and bank deposits that
provide firms with the spending power to pay
their bills and expenses.…read more

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Cash flow
· Cash flow refers to the flows of cash both into
and out of a business
· Cash inflows are payments into a firm from
customers or other sources
· Cash outflows refer to the payments made by
a business
· Net cash flow = cash inflow- cash outflow…read more

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Cash flow forecasting
Cash inflows result from:
· cash sales from customers
· Payments from debtors
· Cash from other sources such as bank loans
Cash outflows result from:
· Paying overheads such as rent and wages
· Paying for raw materials and other variable
costs…read more

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Cash flow forecasting
A cash flow forecast will include:
· Cash inflows (receipt)
· Cash outflows (payments)
· Net cash flow (inflows-outflows)
· Opening balance (this is the same as the
closing balance of the previous period)
· Closing balance (opening balance combined
with net cash flow)…read more

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Importance of cash flow forecasting
· To identify periods of cash shortfall so action
can be taken to deal with this
· To identify periods of cash surplus so
expenditure can be planned
· To secure additional funding, for example,
from a bank…read more

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