Chapter 17 Flashcards
(18 cards)
Cash flow forecasts
Prediction of a business future inflows and outflows over a period of time.
Receipts
Money the business recieves each month
Payment / expenditure
Money the business spends each month
Net cash flow
Difference between cash in and cash out of a business
Opening cash
The money a business has @ the start of each month
Closing cash
Amount of cash at the end of each month
Net cash calculation
Total receipts- total payment
Opening cash calculations
The closing cash from month before
Closing cash calculations
Net cash + opening cash
Reasons of cash flow forecasts
Identify times of possible deficits- helps businesses try to prevent cash flow deficit
Fixed expenditure
Money that’s spend at the same time each week , month , year
Irregular expenditure
Money that varies and changes
Discretionary expenditure
Money spent on things you don’t even need
Bank over draft
The bank allows its customers who have an account to withdraw more than what they have in the account. Up to an agreed amount
Credit card
- a customer pays for good and services using their card and pint of sale , credit card firm pays and if u pay it off early then no interest
Trade credit
A business receives good and services from its suppliers and pays by an agreed date I. The future. Amount of credit depends on credit worthiness
Accrued expenses
When a supplier allows a business and house hold to use their services and pay later
Bank over draft adv and dis
Interest-only on the amount used rather than max overdraft
Application process- fast application and approval
Penalties-if it exceeds the limit or fails to pay it on time , penalties apply
Damage to credit rating-failure to make repayments
