Introduction
1. A well-versed businessman keeps his business insufficient cash so that the business can run smoothly, systematically and in control.
2. Traders must ensure that business capital is not tied to stocks or fixed assets that are difficult to convert into cash.
3. As cash balances in the hands of businesses are constantly changing, traders should ensure that there is sufficient cash to buy new stocks, finance all operating expenses, and settle debts to creditors.
4. If cash inflows exceed cash outflows, then the business will not have cash flow problems.
5. If cash inflows exceed cash outflow, then:
(a) business money fund increases
(b) businesses are able to pay
On the other hand, if cash inflows are less than cash outflow, then:
(a) business money laundering
(b) businesses are able to pay
6. Budget can be prepared to plan and control cash flows for a certain period, usually one year.