Improving Cashflow

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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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