What Is Cash Flow

1
What Is Cash Flow?

• Cash flow is how money moves through a business
  over time

2
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

3
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)

4
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

5
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