Learning Aim C - Financial Planning And Forecasting Flashcards
What’s cash flow forecasting
Predicting inflows and outflows
What does cash flow forecasting allow
Keep track of money owed by customer and money the business owes
Benefits of cash flow forecast
Owner can plan ahead for cash flow problems
Owner knows when revenue is due from debtors
Risks of not using cash flow forecast
Money may not be chased up
Long term issues won’t be shown
How do you improve cash flow
Delaying payment time with suppliers
Sell assets
Internal sources of finance
Owners own funds
Sales of assets
Retained profit
Short term external sources of finance
Bank overdraft
Credit cards
Trade credit
Long term external sources of finance
Bank loans
Government grants
Peer to peer lending
Hire purchase
Leasing
Venture capital
Adv and disadv questions to ask for sources of finance
Any additional cost?
Any loss of ownership?
Are profits shared?
Will you own the asset?
Does it have to be paid back?
Which line starts from 0 in BEP
Total revenue
Which line is horizontal in BEP
Fixed costs
Which line starts at fixed costs in BEP
Total costs
What are owners own funds
Money funded directly from the owner
What is retained profit
Profit which is invested back into the business
What are sale of assets
Money used from selling an asset
