22) Cash Budgeting Flashcards Preview

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Flashcards in 22) Cash Budgeting Deck (5)
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1
Q

Why are cash budgets important?

A

So business can insure it can:
pay wages
Monitor spending efficiently
Pay bills

2
Q

Why do cash flow issues occur?

A

When a business has insufficient cash to cover its day to day expenditure it has cash flow problems which can be caused by:
Goods being sold on credit
Money in is less than money out
Paying to much to suppliers for goods

3
Q

How to solve cash flow issues?

A
Raising additional capital 
Taking out loans
Tight credit control -(collecting money owed as quickly as possible)
Delay making payments
Efficient stock control
4
Q

Advantages of preparing a cash budget

A

Finances are better controlled
Money is spent wisely
See where cash flow problem will arose and sort them quickly
Decisions about when to purchase things such as new equipment

5
Q

What is a cash budget?

A

A plan of how much money you have and how you will spend it