Cash flow forecasting Flashcards
(10 cards)
What is cash flow forecasting?
A planning tool to help manage cash and ensure the business doesn’t run out of money.
What is working capital?
The money a business has available to run its day-to-day operations.
What is a credit payment?
When a customer makes a purchase now, but pays within an agreed time period.
What is a creditor?
Someone who is owed money by the business.
What is a debtor?
Someone who owes the business money.
What is a payable?
Money that a business owes to someone else.
What is a receivable?
Money that is owed to the business.
What are 2 ways business try to improve cash flow and a disadvantage of them?
Shorter credit periods - unhappy customers
Overdrafts - have to pay interest
What should new businesses consider when making a cash flow forecast?
The businesses capacity
Experiences of similar businesses
Trends shown by market research
Why isn’t cash flow forecasting always accurate?
Costs may go up
Machinery may break down
