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Cash flow forecasting - Coggle Diagram

- - - - It requires skill and time to make a good cash flow forecast
      - There are external factors which might affect the cash flow which the business does not account for
      - It is only an estimation which might be different from reality
    - - Used to identify where the business experiences cash shortfalls or cash surpluses
      - It can help to make future plans for a business
      - Can be very useful for taking predictions for the business
  - - - Calculate total cash inflow
    - - https://cdn.savemyexams.com/cdn-cgi/image/f=auto,width=1920/https://cdn.savemyexams.com/uploads/2024/04/screenshot-2024-04-18-162855.png
    - - calculate total cash outflow
      - Things like rent, purchases of products or wages of employees
    - - Calculate net cash flow
      - cash inflow- cash outflow
    - - calculate opening and closing balances
      - The amount of money the business ends up at the end of the month
      - Opening balance is the money which the business starts with
  - - - Cash used for paying suppliers could be used for other purposes
    - - Storage and security costs may also be reduced
      - sold at low pries to attract sales
      - less liquid assets will be turned into more liquid assets
    - - Collecting money owed from customers more quickly will increase the level of current assets in the business
- - - - difference between revenue generated and total business costs
    - - money flowing in and out of a business
      - Cash inflow and outflow
        
        Outflow
        
        Cash exiting the business
        
        inflow
        
        CAsh coming in the business
        
        Net cash flow
        
        inflow-outflow