Cash flow is very easy to meet in our ordinary life. Whenever you pay bills or deposit cash or cheques it called cash flow. Simply can say cash flow is money comes in, money goes out. When applied this concept in business, cash flow is getting incomes and paying expenses.
However, there are risks in cash flow. For example, when you deposited cash cheques into your bank, it does not deposit into your account directly. It probably takes more than couple of days to see the money deposit in your bank. Then you might be worried that whether you wrote right account number and amount of deposit or not. Beside, you might even think if bank lost your cheque before you see the deposit transaction in your account. This kind of situation is called cash …show more content…
That is why, a good account receivable is very important for a small business. They can help company to get enough cash to pay their expense and help company to reduce the low cash risk.
2.2.1.3 Why Cash flow is important in small business?
Cash flow is very important in a small business. Small business needs to pay salary to all the staffs, bill to suppliers, owned expense, purchasing inventory to continue to operating business. If no money to pay those expenses, the small business will be hard to run or face to closed down.
Firstly, when we are looking at the small business, there is small group of employees. A good chasing flows can pay your employees on time. Why it is important to pay them on time is business needs to secure your employees’ life and they can have a confidence for your small business, they also work hard for business growth.
Secondly, cash flow is important to pay your supplier on time. If you do, you could avoid the bank interest and late fee from your supplier that could cost you a big money during a year. Small business must avoid the situation that they could waste money. Good cash flow can help the small business to pay on time and small business could save lot of money from the interest and penalty of late
However, there are risks in cash flow. For example, when you deposited cash cheques into your bank, it does not deposit into your account directly. It probably takes more than couple of days to see the money deposit in your bank. Then you might be worried that whether you wrote right account number and amount of deposit or not. Beside, you might even think if bank lost your cheque before you see the deposit transaction in your account. This kind of situation is called cash …show more content…
That is why, a good account receivable is very important for a small business. They can help company to get enough cash to pay their expense and help company to reduce the low cash risk.
2.2.1.3 Why Cash flow is important in small business?
Cash flow is very important in a small business. Small business needs to pay salary to all the staffs, bill to suppliers, owned expense, purchasing inventory to continue to operating business. If no money to pay those expenses, the small business will be hard to run or face to closed down.
Firstly, when we are looking at the small business, there is small group of employees. A good chasing flows can pay your employees on time. Why it is important to pay them on time is business needs to secure your employees’ life and they can have a confidence for your small business, they also work hard for business growth.
Secondly, cash flow is important to pay your supplier on time. If you do, you could avoid the bank interest and late fee from your supplier that could cost you a big money during a year. Small business must avoid the situation that they could waste money. Good cash flow can help the small business to pay on time and small business could save lot of money from the interest and penalty of late