CIE As Level Business | 5.3 Forecasting & Managing Cash Flows - Finance & Accounting

Cash flow forecast

A prediction of the future *cash inflows* and *outflows* of a business.

Formula for *net clash flow*

Inflows - outflows

Opening balance

Cash held at the start of the month

Closing balance

Cash held at the end of the month

Methods of *improving cash flow*

1. *Reduce credit period offered to customers*

—> Increases short term cash inflow

2. *Asking suppliers for an extended repayment period*

—> Reduces short term cash outflow.

3. *Make use of overdraft facilities or short-term loans*

—> Increases short term cash inflow.

4. *Sell of excess inventory*

—> Increases short-term cash inflow.

4. *Sell of assets + lease*

—> Increases short-term cash inflow.