net cash flow Flashcards
how can a business improve cash flow
reducing cash outflows- delaying payments or securing favourable trade credit deals
increasing cash inflow- selling assets, chasing debtors, securing an overdraft.
what is cash flow
the movement of money in and out of a business.
cash inflows
money from selling products or from loans. Capital.
cash outflows
pay wages, supplies and interest on loans
what is net cash flow?
the difference between money in and money out
difference between net cash flow and profit
cash flow includes some items not included in profit e.g. bank loans but not included in revenue
cash flow takes into account the timing of the payment which profit doesn’t
what is insolvency
business runs out of cash and cannot pay suppliers. owners must raise extra finance or cease trading.
closing balance
opening balance + netcashflow
