Chapter 19: Cash flow

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11 Terms

1

cash flow

the sum of cash payments to a business less the sum of cash payments from the business

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2

cash outflow

payments in cash made by a business, such as those to suppliers and workers

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3

cash inflows

payments in cash received by a business, such as those from customers (debtors) or from the bank, e.g., receiving a loan

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4

net cash flow

the sum of cash payments to a business (inflows) minus the sum of cash payments made by it (outflows)

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5

cash flow forecast

estimate of a firm’s future cash inflows and outflows

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6

opening cash balance

cash held by the business at the start of the month

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7

closing balance

cash held at the end of the month becomes next month’s opening balance

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8

net monthly cash flow

estimated difference between monthly cash inflows and outflows

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9

credit control

monitoring of debts to ensure that credit periods are not exceeded

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10

bad debt

unpaid customers’ bills that are now very unlikely ever to be paid

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11

overtrading

expanding a business rapidly without obtaining all the necessary finance so that a cash flow shortage develops

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