Cash Flow Forecasting Flashcards
Revision for cash flow forecasting
A cash flow forecast identifies all the money that will be coming __ and going __ of a business over time.
in, out
What is a cash flow forecast used for?
Predicting if a business has enough Cash to pay its debts.
A cash flow forecast should be updated if there are any cash __ or cash __ so the business can predict any problems.
inflow, outflow
What is a cash inflow?
Cash that a business receives/gains.
What is a regular cash inflow?
Cash businesses receive on a regular basis such as monthly sales.
What is an irregular cash inflow?
Cash businesses receive on a not so regular basis such as bank loans.
What is a cash outflow?
Cash that a business loses/spends
What is a regular cash outflow?
Cash businesses spend on a regular basis such as wages.
What is an irregular cash outflow?
Cash a business loses on a not so regular basis such as new equipment.
What should a business do to prevent cash flow problems caused by irregular cash outflows?
Set aside some cash for the event that it happens.
Name the 4 ways in which a business can improve its cash flow?
Encourage customers to pay with cash, Encourage customers to pay straight away, get a credit period with suppliers and sell extra stock(Extra stock stored by the business)
Cash flow forecasts tell you when a business might have a cash __.
(Hint: not enough cash)
Deficit
Cash flow forecasts tell you when a business makes extra money in their account, this is called a __.
Surplus
What is reinvestment?
Applying some of the business’s cash on things such as extra advertisement or purchase of new machinery/resources.
What are seasonal products?
Products that thee is a higher demand for in various seasons or time periods of the year such as Christmas sweaters or summer hats.
What is opening bank balance?
The amount of cash a business has at the start of the month.
What is closing bank balance?
The amount of cash a business has left at the end of the month.
What is cash delay?
The time between a customer purchasing a products or service and and paying for it.
What is a high interest savings account?
A bank account that gives off interest over a specific time period be it annually or monthly etc.
If a business doesn’t create and maintain a cash flow forecast, the business can’t tell if it will be able to pay its __.
Bills
