business

• Cash flow is the movement of money in and out of a business
• Negative cash flow means a business can still fall into problems even if it is profitable
• Cash flow is calculated by looking at the difference between cash received and cash paid out
• Cash flow is not the same as profits
• Cash is used to pay debts and other obligations
• Cash is recorded before the goods or services are recorded
• Costs are recorded when the goods or services are received, not when they are paid for
• Changes in commodity prices can affect cash flow
• Short-term sources of finance

  Used to cover short-term expenses that can be repaid quickly, such as paying for stock or goods later
• Long-term sources of finance

  Usually repaid over a longer time period (even up to 25 years), used to finance a new business or to expand a business
• Short-term sources of finance are good for covering short-term expenses that can be repaid quickly
• Short-term sources of finance can help solve cash-flow problems
• A business has a negative cash-flow forecast for August and September


  The most appropriate action would be to arrange an overdraft with its bank