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Cash Flow for The Sea View Hotel. Evaluate how using cash flow forecasts and financial recording systems can contribute to managing business finances at The Sea View Hotel:

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Introduction

BUSINESS COURSEWORK: FINANCE 3 AMY HEATH Task 1 Cash flow forecast for The Sea View Hotel: Task 2 Analyse the cash flow produced in Task 1, including the implications of the regular and irregular cash inflows and outflows for The Sea View Hotel: The advantages of a cash flow are that you can view how much money is going in and out of your business every month. The cash flow for The Sea View Hotel shows that they are in loss for the majority of the year. The inflow isn't good enough and to improve this they should raise the price of the hotel rooms and food. To raise their inflow they could advertise and do promotions to get more customers/revenue in. The outflows in some parts are big values, (the irregular cash outflows) which could be paid over time instead of all at once. They could reduce outflow even more by reducing the price of the food and utilities, and even change their insurers to a cheaper one. ...read more.

Middle

This is a bill for payment. When the customer receives the invoice it is checked carefully to make sure that it matches the GRN (Goods received note) and the prices match those quoted on the purchase order. This can be used if the supplier is trying to overcharge the customer. * Credit Note: Occasionally, there may be a problem because the goods supplied are incomplete, incorrect or damaged. Or an invoice may be disputed because the price is too high. If goods are returned or an invoice is incorrect then a credit note is issued. This is the opposite of an invoice and confirms that the amount on the credit note will be deducted from the customer's account. * Cash Receipts and Payments: Most business customers pay be cheque or electronically. In both cases there is no need to issue a receipt. These are only given to acknowledge the cash payments, which are rarely made by business customers. This is why they are often called cash receipts. This can be used for returning items as a proof of purchase. ...read more.

Conclusion

This can act as an early warning system. It can help you manage your finances in advance by looking at the previous years forecast and it can show you where to improve and where you did well. By recording transactions accurately you are cutting down on fraud which will help the business make more profit. You will be cutting down on fraud because you will have a paper trail that you can use to back you up if need be. Better stocktaking means they can order stuff that they need, rather than overstocking or under stocking items which wastes money. Cash flow forecasts can help businesses to spread payments out over a period of time, making it so there isn't one big dip one particular month. Disadvantages: Using a cash flow forecast to predict the businesses future can be risky as it is only a prediction based on previous years. Things such as a recession could happen and so the business will not get as much money as it did in previous years. This could mean that the business isn't prepared when they get a sudden dip in revenue and they could go bankrupt. ?? ?? ?? ?? ...read more.

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