Cash inflows/receipts
-The money coming into the business
-Money flows into the business when income is received.
Cash outflows/payments
-The money going out of the business
-Money flows out of a business when payments are made.
Cash sales
when customers paid for it at the time of the purchase
Credit sales
paid for the products however it takes time for it to be paid for
Value added tax
Value Added Tax is charged on most goods and services. A business must be registered for VAT if its sales go over the VAT threshold (£82 000 in 2015). The business adds VAT to the cost of its goods and services.
Cash flow forecast
a prediction of the expected cash balance at the end of each month in the future
Opening balance
the amount of cash the business has the start of the month
Total cash inflow
the total cash the business expect to receive during the month
Total cash outflow
the amount of cash the business expects to spend during the month
Inflow-outflow
the difference between the cash coming in and out of the business
Closing balance
the opening balance + the difference between the cash coming in and the cash coming out.
Purchase of assets
These are small and large expenditures on items, from computer printers and telephones to vehicles and expensive machinery and buildings
Rent, rates, salaries, wages and utilities
These are all regular outflows. The business must have the cash to cover these.
Cash and credit purchases
Anything a business buys is an outflow whether it is for use by the business or resale, e.g. raw materials, stationery.
loan outflow
Money borrowed by the business from an external source
capital introduced
Funds invested in the business by the owner or shareholders
sales of assets
Money received from selling an asset, e.g. machinery
bank interest received
the business may store money in a savings account on which the bank will pay interest