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Analysing Cash Flow Forecast (Solutions to cash flow problems (Keep a cash…
Analysing Cash Flow Forecast
Limitations of cash flow forecasting
Limited Information
estimate can often prove to be wrong, giving an inaccurate picture of future cash flows
Money shortages can also occur simply as a result of bad management
Myriad factors can directly lead to cash flow problems, including poor sales numbers
poor debt collection and stagnant inventory
What problems lead to negative cash flow
Sales Decline
Slow Moving Inventory
Uncollected Debts
Poor cash flow forecasting and management
Solutions to cash flow problems
Keep a cash flow forecast
Keep on top of payments
Stay on top of stock management
Stay friendly with lenders
Access credit
Tighten up on your outgoings
Anticipate problems before they happen
Benefits of cash flow forecasting
Predict cash shortages and surpluses
compare business expenses
see income for periods
Estimate effects of business change (e.g., hiring an employee)
Prove to lenders your ability to repay on time