Cash Flow Forecasting Flashcards
What will the Cash flow forecast do?
It will record and identify the source of the money coming in each month and the money going out each month, and whether there is excess money at the end of the month.
What are Inflows?
Money that is coming into the business.
Examples of Inflows?
Capital - moeny paid in to set up the business
Money from selling products or services to customers
Loans
Overdrafts
Interest paid on savings
What are Outflows?
Money that is going out of the business.
Examples of Outflows?
Rent or mortgage for premises Wages for employees Purchase of stock or materials from suppliers Utility bills such as gas, electricity and water Telephone and internet Advertising, which may not be each month Repairs Purchase of new equipment Insurance Repament on loans
What will the forecast highlight?
The forecast will highlight months when the income from sales will not be suffient to cover the outgoings and the business can then decide what step to take.
What is a Balance sheet?
It is a summary of the business financial position.
What information is needed to produce a cash flow forecast?
Capital from owner Sales Materials Rent Council tax Wages Equipment Utility bills Insurance Advertising Telephone Repairs
What can the business use the Cash flow forecast to identify?
The business can use the cash flow forecast to identify any possible issues with cash flow or any problem from ash surplus or deficit.
