Cash Flow Management (HSC SSCE Business Studies): Flashcards
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Cash flow definition
Cash flow definition
Movement of money into and out of a business over time
Cash flow problem occurs when
Cash flow problem occurs when
More money flows out than in or payments due before receipts
Key to avoiding cash flow problems
Key to avoiding cash flow problems
Matching cash inflows with cash outflows
Cash flow statement purpose
Cash flow statement purpose
Tracks cash receipts and payments over time
Cash flow forecast
Cash flow forecast
Estimates money expected to flow in and out of business
Distribution of payments strategy
Distribution of payments strategy
Spreading payments throughout month/year to avoid shortfalls
Early payment discount
Early payment discount
% reduction on invoice if paid before deadline
Factoring definition
Factoring definition
Sale of accounts receivable to finance co. for discounted price
Invoice discounting vs factoring
Invoice discounting vs factoring
Business retains debt collection responsibility with customers
Most common SME cash flow problem
Most common SME cash flow problem
Slow-paying debtors who delay payment beyond agreed terms