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GCSE Business · key term
Total cash inflows minus total cash outflows during a period.
Used by AQA, Edexcel and OCR
Paper 1, Paper 2
Revise: Cash Flow ForecastingPositive net cash flow means more cash enters than leaves during a period. This improves the cash position and can help a business pay bills reliably, cope with unexpected expenses and fund purchases. However, the amount of cash already available still matters: a small positive cash flow may not be enough to clear an existing shortage.
Specification 1.3.3 · Paper 1
Keep net cash flow separate from the closing balance: one measures the change during the month; the other shows the cash position at the end.
Distinguish negative net cash flow from a negative closing balance. Use both figures when judging whether the business faces a cash shortage.
Do not confuse positive net cash flow with a positive cash balance. One measures a change during a period; the other measures cash available at a particular time.
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Cash inflows minus cash outflows in a given period.
Revise: Cash and Cash-FlowPositive net cash flow builds the cash balance, but a business does not need positive net cash flow every single month: cash saved from earlier months can cover a temporary shortfall.
Paper 2
The difference between total cash inflows and total cash outflows during a period: .
Revise: Cash vs ProfitIf it is large enough, total cash inflows can exceed total cash outflows, producing positive net cash flow despite the trading loss.
The difference between cash inflows and cash outflows over a period: cash inflows minus cash outflows.
The difference between total cash inflow and total cash outflow during a time period: .