Dental Nurse
Unit 3
Task 7
D1 Evaluate how cash flows and financial recording systems can contribute to managing business finances.
Cash flow relates to the amount of money received and spent in a given period. Business can have cash flow problems when the business spends too much money than they receive or because some people who owe them money have not paid their bills when they should. To avoid these problems to occur businesses should make sure they prepare a cash flow forecast. Cash flow forecast is an estimate of the timing and amount of a company’s inflows and outflows of money measured over a specific period of time. This means listing and adding up all their expected cash inflows. This is the money the business expects to receive and pay into its bank account. It then needs to add up its cash outflows which is the money that business expects to pay other to pay to other people or businesses such as loan repayments and wages etc. The difference between these two figures is the cash balance. Cash balance is calculated by subtracting cash outflows from cash inflows. All businesses aim to have a positive cash balance, which takes place when inflows are greater than outflows.
To avoid problems occurring in the business, they can temporarily reduce their expenses for some months or they can arrange overdraft from banks for a short time. They can also chase up any outstanding debts that are owed by customers. The business should always check their cash flows; see if there are any problems occurring and if there is they need to make a quick and appropriate action to deal with the problem. The other thing the business has to keep a look out for is the regular and irregular inflow and outflows. Some inflows and outflows of cash are regular but some of them are not. The business should always aim to keep a regular flow because it makes it much easier to plan and predict cash flow. If in any situation where the inflows and outflows are irregular then the timing is
Task 7
D1 Evaluate how cash flows and financial recording systems can contribute to managing business finances.
Cash flow relates to the amount of money received and spent in a given period. Business can have cash flow problems when the business spends too much money than they receive or because some people who owe them money have not paid their bills when they should. To avoid these problems to occur businesses should make sure they prepare a cash flow forecast. Cash flow forecast is an estimate of the timing and amount of a company’s inflows and outflows of money measured over a specific period of time. This means listing and adding up all their expected cash inflows. This is the money the business expects to receive and pay into its bank account. It then needs to add up its cash outflows which is the money that business expects to pay other to pay to other people or businesses such as loan repayments and wages etc. The difference between these two figures is the cash balance. Cash balance is calculated by subtracting cash outflows from cash inflows. All businesses aim to have a positive cash balance, which takes place when inflows are greater than outflows.
To avoid problems occurring in the business, they can temporarily reduce their expenses for some months or they can arrange overdraft from banks for a short time. They can also chase up any outstanding debts that are owed by customers. The business should always check their cash flows; see if there are any problems occurring and if there is they need to make a quick and appropriate action to deal with the problem. The other thing the business has to keep a look out for is the regular and irregular inflow and outflows. Some inflows and outflows of cash are regular but some of them are not. The business should always aim to keep a regular flow because it makes it much easier to plan and predict cash flow. If in any situation where the inflows and outflows are irregular then the timing is