Question

Discuss why cash flow planning is important for small businesses.

Answer 1

Solution -

WHAT IS CASH FLOW ?

Violations and withdrawals of funds representing the organization's activities. In the article, there is a difference between the cash flow duration and the amount of cash available at the beginning of the end of that period .

WHY CASH FLOW IS NEEDED ?

Shortage of cash is one of the biggest reasons for small business failures.

The Small Business Administration states that "insufficient cash reserves" is one of the major reasons that it does not succeed. It's called "no money," and it sets you off faster than anything else.

CASH FLOW PLANNING IS IMPORTANT FOR SMALL BUSINESSES ?

For many small businesses, cash flow is focused on cash and cash withdrawals from the business. But there are two other potential sources of cash flow for big business, and they are called free cash flow (FCF) in the cash flow analysis method.

Free cash flows include other kinds of cash flows, in addition to cash in operations, including:

Cash Flow from Investments Your business may spend or acquire money from buying or selling used properties in your business. For example, selling used machines or vehicles can make extra money.

Cash flow from the budget, in the form of capital appreciation (selling shares of shares) and returning to investors