effective cashflow management

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Unit 3 Investigating Financial Control

Task 3 D1

It is now 12 months since Jane started the business.  During the year she has had time to reflect on month to month trading.  She has asked you as a friend to write her a report outlining the following:

  1. What courses of action could be introduced to control the business’s cash flow most effectively?
  2. How will this contribute to the overall effective performance of the business operation and ultimately maximise cash flow.


“Cash flow forecasting means preparing a cash flow statement for the future with predicted inflows and outflows.”

(Source: BTEC First Business)

A business often prepares a cash flow forecast showing the money likely to flow into and out of the business in a given period.  Forecasts are based on past experience of the business.

Cash flow forecast include revenue such as cash sales, credit sales, loans and expenditures like wages, insurance, loan payment, etc.


“A Budgetary control is a system of creating budgets, monitoring progress and taking appropriate action to achieve budgeted performance.”

 (Source: www.brunswickis.co.uk)

Budgetary control is a process of monitoring and analysing financial control within organisation.


“A budget is a plan, which is set out in numbers.  It sets out figures that an organisation or company hopes to achieve in the future.”

(Source: THE TIMES 100)

Budget is a financial plan, sets out financial targets and a plan expressed in money over a given period.

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Organisations prepare budgets for sales, production, costs, assets, liabilities and cash flow and prepare in advance then compared with actual performance.

Managers are responsible for the controllable costs within their budget and they are require to take appropriate action if there are any mistakes.


1. What courses of action could be introduced to control the business’s cash flow most effectively?

"Cash is King"! Without cash flow there are  nothing in business.  Cash flow is the life blood of business and can be the primary ...

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**** The writer has done some effective research and explored many of the ways of dealing with cash flow problems. Missing out on the overdraft is a fundamental flaw as it is an important method for dealing with cash flow problems.