Unit E
- Created by: caitlynkrs1
- Created on: 16-11-20 10:28
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Cash Flow Forecast - a document that shows the predicted flow of cash into and out of a business over a given period of time, normally 12 months.
Inflows/receipts :
The money coming into the business from various sources.
- Cash Sales - The customer pays at the time of the purchase
- Credit Sales - The customer pyas in a pre-agreed period after the sale
- Loans - Bank loans to fund the purchase of assets such as machinery and vehicles
- Capital Introduced - Money invested from entrepreneurs or shareholders when a business is first set up or looks to expand
- Sale of Assets - The sale of items owned by the business which are no longer needed in order to bring a short-term cash injection into the business
- Bank Interest Recieved - Interest paid by the bank on credit balanaces
Outflows/payments :
The money going out of the business for various purposes.
- Cash Purchase - Items purchased by a business and paid for at the time of purchase
- Credut Purchase - Items purchased by a business and paid for at a later point in time
- Purchase of Assets - Non-curent assets that a business is likely to keep for more than 1 year
- Value Added Tax (VAT) - Businesses that are VAT registered must pay VAT to HM Revenye & Customes (HMRC)
- Bank Interest Paid
- Rent
- Rates
- Salaries
- Wages
- Utilities
Opening Balance - The amount of cash available in a business at the start of a set time period, for example a month.
Closing Balance - The amount of cash available in a business at the end of a set time period, for example a month.
Credit Period :
The length of time given to customers to pay for goods or services received.
- The longer the credit period, the slower will be the money coming in.
- Affect the ability of the business to gain credit from its suppliers
Solutions to Cash Flow Problems :
- Overdraft Arrangements - A business with a fluctuating cash flow cycle should be able to show the…
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