Business : Money Flows Essay, Research Paper

This

is the flow of all money, both into and out of the business. When bills are

paid or stocks are bought, the money flows out, but when the products are

purchased the money flows in. Bills cannot be paid if there isn?t enough money

flowing in. Poor

cash flow means that you have not got enough money in your business to meet

day-to-day expenses and costs. This could cause problems for you, such as: ·

Staff

not being paid on time ? This will make them annoyed, since they have bills to

pay of their own. They may leave. ·

Bills

not being paid on time ? Some companies may not wait for you to pay them, and

my take legal action against you. If you can?t afford to pay the bills still

you could be declared bankrupt/in the case of a sole trader forced to sell

possessions, and forced to stop trading.You

can create something called a cash flow forecast, to help you to anticipate

when there might be a lack of money, when an overdraft may be needed to get

through the month. Estimating

the cash inflow, outflow, and calculating your bank balance at the beginning

and end of the month create a cash flow forecast.You have to guess at what time of year your product would

not do so well, for example books may sell better in the summer months when

more people go on holiday and buy books to read whilst they are away.I am not going to create a cash flow forecast for my

business, since I don?t think I have enough information to estimate the above

things, and I don?t really think books sell a substantial amount more at any

particular time of year.