Week 9 Forecasting, Budgeting and Cashflow

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What can automated invoice reminders and online payment gateways help achieve?

Increase late payments

Reduce overall revenue

Cause confusion for customers

Streamline the payment process (correct)

What is the main similarity between planning a birthday party and planning a business?

Both involve sending invitations to guests.

Both involve setting up decorations.

Both involve forecasting, budgeting, and cash flow management. (correct)

Both involve hiring entertainment.

What is the key difference between profit and cash flow?

Profit examines expenses, while cash flow considers money received from sales.

Profit focuses on money received from sales, while cash flow looks at expenses.

Profit analyzes how much a business makes from sales, while cash flow focuses on when that money is actually received. (correct)

Profit estimates bills and expenses, while cash flow looks at the gap between inflows and outflows.

Why can a business face cash flow problems even if it is profitable?

Suppliers provide goods/services on credit. Signup and view all the answers

Why is tracking customer lifetime value (CLTV) important?

To understand the long-term revenue potential of each customer Signup and view all the answers

What does forecasting for a business involve?

Estimating future sales based on market trends, past performance, and industry data. Signup and view all the answers

What does the 'maximum deficit cash flow' indicate for a business?

The largest cash shortage they predict facing. Signup and view all the answers

What is the benefit of promoting pre-orders for new product launches?

Generate revenue upfront and provide insights into potential demand Signup and view all the answers

How does budgeting for a business differ from budgeting for a birthday party?

Allocating resources to different areas of the business instead of party items. Signup and view all the answers

Why might unexpected costs pose a challenge for a business's cash flow?

They can drain cash reserves quickly. Signup and view all the answers

How does tracking conversions & sales from marketing campaigns help a business?

Enables allocating resources towards impactful campaigns Signup and view all the answers

What is an important aspect of cash flow management for a business?

Monitoring the business's income and outgoings. Signup and view all the answers

How can businesses encourage faster payments from customers?

Provide various secure payment options like credit cards or installment plans. Signup and view all the answers

In forecasting for a business, what is used to anticipate busy and slow periods?

Market trends, past performance, and industry data. Signup and view all the answers

What does developing subscription models with recurring payments help achieve?

Strengthen customer relationships Signup and view all the answers

Why is it important to analyze marketing ROI in terms of conversions and sales?

To monitor which campaigns generate the most sales and fastest conversions Signup and view all the answers

What is one strategy mentioned to drive sales and speed up payments?

Creating limited-time offers and discounts to incentivize immediate purchases. Signup and view all the answers

What is one common principle between budgeting for a birthday party and budgeting for growth in a business?

Both involve allocating funds to different areas with specific plans in mind. Signup and view all the answers

What does forecasting involve in terms of analyzing data?

Predicting future financial performance Signup and view all the answers

What is the main difference between budgeting and forecasting in business finance?

Budgeting is a static roadmap, while forecasting is a dynamic GPS. Signup and view all the answers

How does a budget differ from cash flow?

Budget outlines estimated income and expenses, while cash flow measures actual cash movements. Signup and view all the answers

Why is it important to regularly review income and expenses in business?

To identify areas where you can save money. Signup and view all the answers

How does forecasting benefit financial backers?

It boosts confidence by demonstrating financial viability Signup and view all the answers

How does Wall Drug focus on profitability during harsh economic climates?

By tracking expenses and revenue. Signup and view all the answers

What is the purpose of integrating financial plans into operational plans?

To plan all teams based on the financial forecast Signup and view all the answers

What does the Wall Drug business do to attract customers and foster long-term cash flow?

Offer free ice water during harsh economic periods. Signup and view all the answers

How does forecasting act as an early warning system for businesses?

By identifying potential roadblocks like inventory shortages or production bottlenecks Signup and view all the answers

What advice does Wall Drug give regarding employees during economic downturns?

Value loyal and happy employees. Signup and view all the answers

What can businesses do using forecasting tools to make informed decisions?

Test alternative plans & strategies like different marketing campaigns or pricing strategies Signup and view all the answers

Why is cash flow referred to as the lifeblood of a business?

Because it measures the movement of cash in and out of a company over a specific period. Signup and view all the answers