Cash flow

• what is cash flow forecast?


  estimating future cash inflows and outflows.
• what is cash inflow?


  when cash comes into the business by a customer paying, loans, etc
• what is cash outflow?


  when cash leaves the business by salaries and costs being paid
• what is net cash flow?


  cash inflow - cash outflow
• advantages of a cash flow forecast?

  • identify financial problems the business may face and how to overcome them
  • ensure the business can pay employees and suppliers
  • can assist in a business obtaining finance
  • can help with financial decision making
• disadvantages of a cash flow forecast?

  • can be wrong
  • unseen factors may impact it
  • certain costs may have been missed
  • customers may pay late
  • costa of raw materials may be higher then expected.
• What does it mean for a business to be insolvent?


  Unable to pay debts.
• what are receivables?


  money customers owe to the business
• what are debtors?


  Individuals or entities that owe money to others. Same as receivables
• what are payables?


  money the business owes
• what are creditors?


  people the business owes money to. same as payables
• what is liquidation?


  a legal process where the business is shut down. all its assets are sold so the money can pay off its debts.