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5 Cards in this Set

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  • Back

Cash flow

The flow of money in and out of the business



Flows in; revenue, payments by debtors, loans, interest payments



Flows out; wages, stock replenishment, payments to creditors, loan repayments

Cash flow cycle

Cash into the business > used for raw materials > products made > goods and services sold for cash (repeat)

Net cash flow (net monthly balance)

Inflow - outflow

Problems with cashlow forecasts

- Estimates of costs may be wrong


- start up companies may lack experience


- doesn't account for changes in the economy I.e. unemployment rates, brexit


- doesn't account for fashion and fads

Ways to improve cashflow

- increase sales


- reduce costs


- overdraft


- loan


- trade credit


- sell/lease back assets