Unit 3 D1

D1 - evaluate how cash flows and financial recording systems can contribute to managing business finances.

Introduction – In this assignment I will explain how the cash flows and financial recording systems can contribute to managing business finances.

Advantages of cash flow towards business finances

Cash flow is the movement of money going in and out of the business. Using cash flows can determine whether the business is doing well or whether it is getting negative figures.Being able to make cash flow forecast can make it easy for a business to keep track of what has been going on within the business. The cash flows are used to help the business make a prediction as to what may happen. They are able to take notice to what has been bought and what has been sold this way they are able to know what they need to improve within their business. The cash flow can benefit their business finances as they know whether they are making a profit or a loss. They show where cash have been coming from. Normally cash flow forecast can be done in Microsoft excel, this is a benefit for the business because if they were doing it on paper then it would be time consuming however in excel they are able to enter formulae which allow them to add on information to what they already have if just, entering new data means that you don’t need to put in each individual calculation, they just need to enter the information and the formulae will do all the calculations itself. You would be able to change the data into graphs, this will make it easier for the business to indicate the issues within the business that way they could improve on what they have found which could affect the business. For example the data in the cash flow forecast can be changed into pie chart, line graph and bar charts. This will allow them to see any odd occurrences within the business at certain times, these can be irregular outflows whereby money goes out of the business unexpectedly, like in a restaurant and a...