CH6 FINANCIAL

Question 2

refers to the strategic planning, organizing, controlling, and monitoring of financial resources and activities that are important for the success and sustainability of a digital or e-commerce enterprise.

Answer 2

Financial Management

Question 3

It includes managing the business’s financial operations such as budgeting, pricing, investment, payment systems, cash flow, profitability, record keeping, and compliance with tax and legal regulations, all in the context of a digital environment.

Answer 3

Financial Management

Question 4

IMPORTANCE OF FINANCIAL MANAGEMENT IN ONLINE BUSINESS

Answer 4

Ensures cash flow sufficiency
Helps in investment decisions (ads, tools, inventory)
Assists in pricing and profitability strategy
Prepares the business for taxes and legal compliance

Question 5

ELEMENTS OF FINANCIAL MANAGEMENT IN ONLINE BUSINESS

Answer 5

1. Financial Planning and Budgeting
2. Pricing Strategy and Profitability
3. Cash Flow Management
4. Financial Reporting and Monitoring

Question 6

Online entrepreneurs must prepare for startup costs, operational expenses, and scaling opportunities.

Answer 6

Financial Planning and Budgeting

Question 7

A well-planned budget ensures they do not overspend or run out of funds.

Answer 7

Financial Planning and Budgeting

Question 8

Choosing the right pricing model ensures competitiveness and profit.

Answer 8

Pricing Strategy and Profitability

Question 9

Profitability analysis tells a business if they are truly making money or just covering costs.

Answer 9

Pricing Strategy and Profitability

Question 10

Managing cash inflows such as sales, affiliate earnings and outflows like expenses, and marketing costs to ensure the business remains solvent and can meet its obligations on time.

Answer 10

Cash Flow Management

Question 11

Tracking financial data through reports like income statements, balance sheets, and cash flow statements helps in making informed decisions.

Answer 11

Financial Reporting and Monitoring

Question 12

means a business has the financial ability to meet its obligations and liabilities as they come due.

Answer 12

solvent

Question 13

PRICING STRATEGIES

Answer 13

1. Cost-Plus Pricing
2. Value-Based Pricing
3. Competitive Pricing
4. Subscription Pricing/Freemium Pricing

Question 14

Pricing method where you add a fixed percentage or markup to the cost of the product or service.

Answer 14

Cost-Plus Pricing

Question 15

Prices are set based on the customer’s perceived value rather than the actual cost.

Answer 15

Value-Based Pricing

Question 16

Pricing based on what competitors are charging for similar products.

Answer 16

Competitive Pricing

Question 17

Customers pay a recurring fee on weekly, monthly, or annually basis to access a good or service.

Answer 17

Subscription Pricing/Freemium Pricing

Question 18

Basic services are free, while premium
features are paid.

Answer 18

Subscription Pricing/Freemium Pricing

Question 19

is the process of tracking, analyzing, and optimizing the inflow and outflow cash in a business.

Answer 19

CASH FLOW MANAGEMENT

Question 20

this ensures that there is always enough cash on hand to cover operational needs and invest in growth.

Answer 20

CASH FLOW MANAGEMENT

Question 21

TYPES OF CASH FLOWS

Answer 21

Cash Inflows
Cash Outflows

Question 22

Cash Inflows

Answer 22

Product sales
Subscription fees
Affiliate commissions
Returns from investments

Question 23

Cash Outflows

Answer 23

Inventory and supplier costs
Platform and payment fees
Ads and marketing spend
Tools and software subscriptions
Taxes and salaries

Question 24

CASH FLOW MANAGEMENT STRATEGIES

Answer 24

ACCELERATE CASH INFLOWS
DELAY OR SPREAD OUT CASH OUTFLOW
KEEP A CASH RESERVE /BUFFER FUND
REGULARLY MONITOR AND FORECAST CASH FLOW
OPTIMIZE INVENTORY MANAGEMENT
CONTROL OPERATIONAL EXPENSES
INCREASE REVENUE STREAMS
USE TECHNOLOGY FOR AUTOMATION

Question 25

Offer incentives for early payment, discount for upfront or early payment.

Answer 25

ACCELERATE CASH INFLOWS

Question 26

Use reliable and fast payment gateways like GCash, PayPal, or PayMongo to speed up transfers.

Answer 26

ACCELERATE CASH INFLOWS

Question 27

Encourage digital payments over cash on delivery to reduce delays in receiving payments.

Answer 27

ACCELERATE CASH INFLOWS

Question 28

Negotiate payment terms with suppliers. For example, 30-day terms instead of immediate payment).

Answer 28

DELAY OR SPREAD OUT CASH OUTFLOW

Question 29

Schedule payments smartly to align with expected inflows.

Answer 29

DELAY OR SPREAD OUT CASH OUTFLOW

Question 30

Use business credit lines or revolving funds to cover short gaps in cash flow.

Answer 30

DELAY OR SPREAD OUT CASH OUTFLOW

Question 31

Set aside a percentage of income as an emergency fund, recommended is 10–20%.

Answer 31

KEEP A CASH RESERVE /BUFFER FUND

Question 32

Helps manage slow sales periods or unexpected expenses like equipment failure, shipping delays.

Answer 32

KEEP A CASH RESERVE /BUFFER FUND

Question 33

Forecast Cash Flow

Answer 33

REGULARLY MONITOR AND FORECAST CASH FLOW

Question 34

Use tools like Google Sheets or Wave to project monthly cash inflows and outflows.

Answer 34

REGULARLY MONITOR AND FORECAST CASH FLOW

Question 35

Track actual vs. projected to adjust plans.

Answer 35

REGULARLY MONITOR AND FORECAST CASH FLOW

Question 36

Spot cash gaps early and make informed decisions.

Answer 36

REGULARLY MONITOR AND FORECAST CASH FLOW

Question 37

Avoid overstocking products to reduce storage costs and tied-up capital.

Answer 37

OPTIMIZE INVENTORY MANAGEMENT

Question 38

Use just-in-time systems if possible to maintain lean inventory.

Answer 38

OPTIMIZE INVENTORY MANAGEMENT

Question 39

Audit subscriptions and cancel unused digital tools or services.

Answer 39

CONTROL OPERATIONAL EXPENSES

Question 40

Choose cost-effective marketing strategies like organic social media, influencer barter.

Answer 40

CONTROL OPERATIONAL EXPENSES

Question 41

Outsource tasks only when necessary.

Answer 41

CONTROL OPERATIONAL EXPENSES

Question 42

Upsell and cross-sell on your website or social media shop.

Answer 42

INCREASE REVENUE STREAMS

Question 43

Add digital products that require no inventory.

Answer 43

INCREASE REVENUE STREAMS

Question 44

Offer subscription-products or bundles for recurring revenue.

Answer 44

INCREASE REVENUE STREAMS

Question 45

Automate invoicing and reminders to avoid late payments.

Answer 45

USE TECHNOLOGY FOR AUTOMATION

Question 46

Link accounting tools like QuickBooks to sales platforms for real-time tracking.

Answer 46

USE TECHNOLOGY FOR AUTOMATION