Causes of cash flow problems:

• What is cash flow defined as?

  Movement of money in and out
• Match the benefit of managing cash flow with its description:

  Maintain Liquidity ↔️ Ensures enough cash for liabilities

  Pay Obligations ↔️ Avoid penalties and late fees

  Invest in Growth ↔️ Funds expansion and new equipment
• Paying obligations on time helps avoid late fees and penalties
• Slow customer payments can lead to delayed cash inflows.


  True
• Money entering the business is called cash inflow
• What are the two main components of cash flow?

  Cash inflow and outflow
• What does investing in growth depend on for a business?

  Sufficient cash flow
• What does overtrading refer to?

  Rapid business growth
• How does overexpansion affect cash flow?

  Insufficient funds to cover expenses
• What is an example of cash outflow in a business?

  Rent payments
• Match the benefit of effective cash flow management with its description:

  Maintain Liquidity ↔️ Ensures sufficient cash for liabilities

  Pay Obligations On Time ↔️ Avoids penalties and maintains relationships

  Invest in Growth ↔️ Provides funds for expansion
• Holding too much stock or having obsolete inventory can lead to poor inventory management
• Effective credit control involves setting clear payment terms and chasing invoices promptly.


  True
• Match the cash flow strategy with its impact:

  Effective Credit Control ↔️ Improves cash inflow, reduces late payments

  Prudent Expense Management ↔️ Reduces cash outflow, increases profit

  Inventory Optimization ↔️ Minimizes holding costs, improves turnover

  Regular Forecasting ↔️ Enables informed financial decisions

  Diversify Funding Sources ↔️ Provides flexibility during shortfalls
• Money entering the business from sales, loans, and investments is considered cash inflow
• In severe cases, cash flow problems can lead to business insolvency.


  True
• Wages are an example of cash outflow.


  True
• Managing cash flow is essential for planning future business operations.


  True
• Arrange the following causes of cash flow problems in order of their impact on cash flow:

  1️⃣ Slow Payments

  2️⃣ Overtrading

  3️⃣ Excessive Expenses

  4️⃣ Poor Inventory Management

  5️⃣ Seasonal Fluctuations
• Holding too much stock is an example of poor inventory management
• High fixed costs can strain a business's liquidity
• Managing cash flow is crucial for businesses to ensure financial stability and facilitate growth
• Customers taking too long to pay their invoices can lead to a delay in cash inflows
• Steps to address cash flow problems:

  1️⃣ Improve credit control

  2️⃣ Enhance inventory management

  3️⃣ Implement financial planning
• Prudent expense management includes reviewing and controlling fixed and variable costs
• Cash flow consists of two main components: cash inflow and cash outflow
• Cash flow problems can lead to financial difficulties and reduced liquidity.


  True
• Slow customer payments can result in temporary cash shortages.


  True
• Sales revenue is an example of cash inflow.


  True
• Maintaining liquidity ensures a business has sufficient cash on hand to meet short-term liabilities.

  True
• Overtrading occurs when rapid business growth outpaces the ability to manage cash flows effectively.

  True
• High fixed costs like rent and wages can strain liquidity
• Regular forecasting helps businesses anticipate potential cash flow shortages.

  True
• Improved credit control, inventory management, and financial planning can help maintain healthy cash flow.


  True
• Insufficient cash reserves can restrict business growth