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The importance of Cash flow planning is linked to liquidity of a business. In any business, there is a need for cash in running day-to-day operations. Some examples include the purchase of office stationary or fuel. Cash flow is simply Cash Receipts minus Cash Disbursements. That means Cash In versus Cash Out. These 'cash needs' of the firm would not be met should a business have its monies tied up in other areas. Examples include: * Credit sales - Having sold goods for n days of credit (ie company to be paid in n days). Credit sales is ok but too much would have effects on the business especially if it is not managing its cash flow. * Assets - Purchases of assets like buildings and machinery must be checked against the cash flow management capacity of a firm given that they would become cash flow burdens to the firm after a purchase. To sum up, liquidity of a business is determined by its cashflow. The cash flow of a business determines its capacity to make certain business decisions. Hence, its importance to a business and business planning.

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โˆ™ 2007-12-26 22:59:38
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Q: Why is cash flow planning important for a business?
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It is often used as a gauge as to how well a business is truly performing. Investors can use the operating cash flow numbers from a business for risk analysis. This is because the cash flow from operations is hard to manipulate.

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Cash flow means the cash in and cash out from business due to different business activities.

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Negative cash flow means cash outflow from business and overall negative cash flow means more cash outflows from business then cash inflow.

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Can The Leasing Help Me With The Cash Flow?

Equipment considered to be important to a company plays a role in the revenue generation or "cash flow" of the business. A negative drain on cash flow can also arise when cash, working capital or a business credit line is used to buy new equipment. Lowering cash outlays by way of arranging low, fixed monthly lease payments undoubtedly affects the cash flow of a business enterprise.

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Cash flow management includes having a reserve on hand. A reserve will help the business remain operational if they experience financial problems.

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Cash out flow is the money going out of the business

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a regular cash flow is money that goes into the business that can be predicted, for example, income, loan to business. Bacically money that the business can tell that is coming into the business.

Is it important to monitor a cash budget only in times of a liquidity crisis?

Here is an excerpt from an article that I wrote for my business newsletter several years ago: Many entrepreneurs struggle to understand the difference between cash flow and profits. Although a business needs to have both to survive, cash flow is the more critical of the two. Cash flow simply refers to the flow of cash into and out of a business over a period of time. It is what you need to have to keep your doors open while you

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Importance of cash flow analysis?

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What is the statement of cash flow used for?

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What exactly is a cash flow lender?

A cash flow lender is responsible for lending or not lending to perspective loaners. The "cash flow" part is referring to the cash flow that the loaner believes he/she will generate from the business, that they are subsequently borrowing the loan for.

What are some business cash flow softwares for small business use?

There are several cash flow software out there. One such small business accounting software is CashFlowManager, which is a simple bookkeeping solution.