Cash flows

why is cash important to business

makes buisness survive

pay employees

prevent buisness failure

how to calculate net cash flow

cash inflow - cash outflow

how to calcualte opening balance

Previous closing balance

how to calcualte closing balance

opening balance + net cash flow

examples of cash inflow

cash sales

loans

personal funds invested

examples of cash outflows

payments of overheads

payment of supplier

income tax, rent

buying equipment

what is a cashflow forecast

predicts the opening + closing balance, inflows and outflows and net cash flows.

why is it important for a buisness to forecast cash flow

predict cash shortages

ensure payments

identify payment issues

what are the problems with forecasting cash flows

customers don’t pay up on time

sales lower than expected

some costs are not included