What Is Cash Flow?
Cash flow is how money moves through a business over time
What is a Cash Flow Forecast?
Any business needs to have a clear view of its receipts and payments This is usually done monthly with the balance at the end of each month being transferred to the beginning of the next month If the closing balance at the end of a month is a negative the business will have to arrange additional funding or a n overdraft facility from the bank
What Is The Use of A Cash Flow Forecast?
Useful for the business to plan so any major costs can be scheduled for the best time The bank needs it to agree any loans Needs it for any application for any grants eg. From the Training And Enterprise Council (TEC)
What Is A Cash Flow Statement?
A cash flow statement is a statement showing how cash has flowed through a business over time including a summary of receipts and payments It is a useful way of monitoring the performance of the business It helps identify crisis points It allows comparison from month to month
Cash Flow And Profit
Profit and cash flow are different A business can be profitable but still collapse as a result of not having enough cash The business must have enough cash to pay for materials and wages before receiving payment from orders sold