analyse the cash flow problems a business might experience Essay

1494 Words May 28th, 2014 6 Pages
M1: analyse the cash flow problems a business might experience
D1: justify actions a business might take when experiencing cash flow problems
1.0 Introduction
In this assignment I will be analysing that a business might experience if their sales figures turn out to be lower than the ones that they have expected or predicted.
1.1 problems of cash flow forecast
Problem 1
Cash flow forecasts are something really important for a business and something that is a part of a business plan. A cash flow forecast is a plan for the future it will tell you whenever the costs are going to be raised over the year. It can also tell you what the business revenue is going to be and what the business performance for the following year is.
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He could also decide to get a small over draft which would keep his business running. Yet again lest not forget an overdraft has its disadvantage and that is when it come to paying back that over draft the interest rate would be high so he would have to think of a way to pay that off and it would not be an easy task for Ricky. Of course Ricky has the option of selling his own assets but that is just an option that could be left for last.
In general I would recommend for Ricky to get a loan from his family or friends because in my opinion that is the best possible decision and the best possible way from him to get his business up and running.
Solution to problem 2
For the second problem there is a solution but this would have to be done correctly by Ricky and the solution is advertisement IF any type of business is looking to increase their sales the best way possible is to make sure to advertise their services a lot and reason being is to make sure that they let their customers know what they have to offer. Yet again we have to look at this from Ricky’s perspective what I would recommend for him to do is whenever he decides to advertise the best thing to do is to make sure he keeps his prices low because first of all this would give him an opportunity to show people what

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