CHAPTER 24


Sources of Finance and The Cash Flow Budget


2.11 Assess the importance of planning an organisation’s cash flow, propose suitable sources of finance to manage expenditure and prepare a budget.


Short-term finance


Credit card Leasing Grant


Opening Cash


overdraft Trade credit Hire


Bank


Medium- term


finance


Long-term finance


Retained earnings/ Reserves


Closing Cash


purchase


Long-term loan


Debt


factoring Medium-


term loan Collateral


Sale and leaseback Net Cash


Deficit Surplus


KEY SKILLS


1. Match a source of finance to the purpose (short / medium / long term).


2. Recommend a suitable source of finance and justify the choice.


3. Explain reasons why a business or club would prepare a cash flow budget.


4. Complete a cash flow budget from given information.


Chapter L.O.


5 1.5 12 1.12 22 2.9 23 25 2.10 2.12 26 2.13


5. Identify a deficit or surplus month from a completed cash flow budget.


6. Advise on the closing cash position, referring to specific figures from a cash flow budget.


INTRODUCTION CLASS ACTIVITY


Castlerock United FC had a great season the year before. In August, the committee met and agreed to spend €2,000 on new goalposts and training gear ahead of the new season. It was a relatively new club and no plan had been made for the money coming in and going out over the following months.


By October, the annual pitch hire bill arrived. As always, some members were slow to pay their membership fees for the year, leaving the club short on money. Training had to be cancelled for two weeks while the committee tried to sort out the shortfall.


242


1. Explain why the club ran short of money in October.


2. What could the club have done differently before spending the €2,000 in August?


3. Suggest two ways a club like Castlerock United FC could raise money to cover the costs of paying for facilities for its members.


LINKS COURSE


KEY WORDS


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