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.