Improving Cashflow

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…