Implement accounting procedures to track money flow
and to determine financial status.
Marketing Management Indicator 2.03
• Making sure there is enough cash to operate is one of business’s most important financial activities
• Movement of cash is important• Determines the amount can work with at any given time• If running low
• May not be able to cover expenses
• May not be able to pay the employees
• May fail
• Businesses that are profitable may experience cash-flow problems
• Sources of cash that flow into a business• Some sources are more reliable and steady than others
The Importance of Adequate Cash Flow to Business
Success
• Start-up money• Funds to cover expenses until revenue starts to come
in• Sale of products
• Main source of cash for established businesses• Loans
• Businesses borrow cash to expand• Possibly needed when sales are slow
• Interest• Invest extra cash to earn interest
• Sale of assets• Anything of value a business owns that can be sold
Sources of Cash
Sources of Cash That Flow Out of a Business
• When• Warns when business will
be low on cash• Identifies high and low
points• Identifies months when
certain sources of income will be collected
• Where• What source• Debit cards, cash, credit
cards• How much
• Tells how much cash is flowing into the business
• Can plan ahead for expected shortages
How do Cash Flow Statements Tell When, Where, and How Much?
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