Cash flow forecasts Flashcards
cash sales
reciepts (inflows)
credit sales
reciepts (inflows)
loans
reciepts (inflows)
capital introduced
reciepts (inflows)
sale of assets
reciepts (inflows)
bank interest recieved
reciepts (inflows)
cash purchases
payments (outflows)
credit purchases
payments (outflows)
rent
payments (outflows)
rates
payments (outflows)
salaries
payments (outflows)
wages
payments (outflows)
utilities
payments (outflows)
purchase of assets
payments (outflows)
value added tax (VAT)
payments (outflows), current rate is 20%
bank interest paid
payments (outflows)
benefits of cash flow forecasts
encourages planning for inflows and outflows, helps identify potential shortfalls in cash balances, enables cash flow to be monitored
limitations of cash flow forecasts
based on forecasts so may be inaccurate, cannot plan for unexpected events, time taken to create one could have been used more productively
improving cash flow by inflows
using financial institutions, short term loan, debt factoring, cash payments from customers, credit control (chasing payments)
improving cash flow by outflows
delaying payments to suppliers, stock management, reduce overhead spending
difficulties improving cash flow
damage to the firm’s reputation, potential loss of customers, administrative costs, may affect profitability
