Forecasting and managing cash flows

Question 1

Cash flow

Answer 1

The sum of cash payments to a business less the sum of cash payments from the business

Question 2

Insolvent

Answer 2

When a business cannot meet its short-term debts.

Question 3

Cash flow forecast

Answer 3

An estimate of the future cash inflows and outflows of a business.

Question 4

Cash inflow

Answer 4

Cash payments into a business.

Question 5

Cash outflow

Answer 5

Cash payments out of a business.

Question 6

Net cash flow

Answer 6

Estimated difference between cash inflows and cash outflows for the period (for example one month).

Question 7

Opening cash balance

Answer 7

Cash held by the business at the start of the month.

Question 8

Closing cash balance

Answer 8

Cash held by the business at the end of the month, which becomes next month’s opening balance.

Question 9

Credit control

Answer 9

Monitoring of debts to ensure that credit periods are not exceeded.

Question 10

Bad debt

Answer 10

Unpaid customers’ bills that are now very unlikely to ever be paid.