1.34 The Importance of Cash

Cash is very important to a business. It is defined as the amount of money that a business has in its bank account. 

A business needs cash to pay its bills and any money it owes.

The main cash payments a business has to make include the folowing:

  • paying suppliers
  • paying employees
  • paying overheads (rent, utility bills)

In order to make sure it will have enough cash, a business will create a cashflow forecast. This is an estimate of the amount of cash flowing into, and out of, the business over a period of one year.

For more information on cashflow forecasts click here.