From the course: Finance Essentials for Small Business
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Prepare a cash forecast
From the course: Finance Essentials for Small Business
Prepare a cash forecast
- We know you'll need sufficient capital to get your new business through the critical first few months. Let's assume you've made it through those first few months. You will still need to track your cash inflows and outflows to ensure that you have sufficient cash to pay the bills that are surely coming. Whether you're at the start of your business or well into the lifecycle of your business, managing cash is critical for the well-being of your business and cash management does not happen by chance. It is up to you to ensure that your cash is managed. We will do this by preparing a cash forecast or budget. Let's start our discussion of cash management by distinguishing between two types of costs, fixed costs and variable costs. Fixed costs are exactly that, they're fixed. Budgeting for fixed costs is relatively straightforward. The amount is fixed, at least over the short term. Variable costs are costs that vary…
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