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?