analyse the cash flow problems a business might experience
M1: analyse the cash flow problems a business might experience
D1: justify actions a business might take when experiencing cash flow problems
1.0 Introduction
In this assignment I will be analysing that a business might experience if their sales figures turn out to be lower than the ones that they have expected or predicted.
1.1 problems of cash flow forecast
Problem 1
Cash flow forecasts are something really important for a business and something that is a part of a business plan. A cash flow forecast is a plan for the future it will tell you whenever the costs are going to be raised over the year. It can also tell you what the business revenue is going to be and what the business performance for the following year is.
Problem 2
From what I can see on Ricky’s cash flow is that he is relying on that one loan which is his capital that he begins with too and that is £17,500 from the first month which is January. Bank loans are great for starting a business but that does not mean that they can not let you down in this case a bank loan can fail Rick because if the bank loan gets delayed or no longer available then this is a big problem for Rick because he cannot do anything best way to explain this would be he would not be able to pay for the truck which is £20,000 and not only the truck that would not be paid for but the sales cost would not be covered. His total payments only for the beginning of year which is the month January his total payments are £22,475 with this type of problems or should I say impacts that can happen there is no way that his business would survive.
Problem 3
Another critical problem that can occur from that cash flow is if the sales figure is lower than the actual sales figure. For example the sales figure that has been predicted by Ricky is £60,000 but let’s say that he actually gets £40,000 as his total figure for his sales. This is a major problem simply because what he as predicted to get for his sales has not been met and
D1: justify actions a business might take when experiencing cash flow problems
1.0 Introduction
In this assignment I will be analysing that a business might experience if their sales figures turn out to be lower than the ones that they have expected or predicted.
1.1 problems of cash flow forecast
Problem 1
Cash flow forecasts are something really important for a business and something that is a part of a business plan. A cash flow forecast is a plan for the future it will tell you whenever the costs are going to be raised over the year. It can also tell you what the business revenue is going to be and what the business performance for the following year is.
Problem 2
From what I can see on Ricky’s cash flow is that he is relying on that one loan which is his capital that he begins with too and that is £17,500 from the first month which is January. Bank loans are great for starting a business but that does not mean that they can not let you down in this case a bank loan can fail Rick because if the bank loan gets delayed or no longer available then this is a big problem for Rick because he cannot do anything best way to explain this would be he would not be able to pay for the truck which is £20,000 and not only the truck that would not be paid for but the sales cost would not be covered. His total payments only for the beginning of year which is the month January his total payments are £22,475 with this type of problems or should I say impacts that can happen there is no way that his business would survive.
Problem 3
Another critical problem that can occur from that cash flow is if the sales figure is lower than the actual sales figure. For example the sales figure that has been predicted by Ricky is £60,000 but let’s say that he actually gets £40,000 as his total figure for his sales. This is a major problem simply because what he as predicted to get for his sales has not been met and