Week 4 Discussion Questions DQ 1 Why might cash flow management be important to an entrepreneur What recommendations would you make to an entrepreneur who struggles with a cash management system A business must have enough cash to meet its obligations as they come due or it will experience bankruptcy Creditors employees and lenders expect to be paid on time which requires cash Proper cash management permits entrepreneurs to adequately meet the cash demands of their businesses avoid retaining unnecessarily large cash balances and stretch the profit generating power of each dollar their companies own Entrepreneurs must have the discipline to manage cash flow from their first day of operations I think any business should prepare monthly cash budgets Basically this is a forecast of the business cash inflows and outflows for a specific period of time To be effective the cash budget should cover all seasonal fluctuations The more variable a company s sales pattern the shorter its planning horizon should be It won t be completely accurate but it will give a business owner a clear picture of a company s estimated cash balance for the period pointing out where external cash may be required or where a surplus cash balance may be available for investing
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