type of activity
Three types of cash flows
It is customary for entrepreneurs to divide the cash flow into receipts and disposals and compare: if the amount of expenses is greater than the amount of receipts, then the month is unsuccessful, and if vice versa, everything is fine. This is the fastest way to assess the state of affairs in a business. However, it is not the most accurate, since a lot depends on what the money was enough for.
For example, in one month they overpaid for the maintenance of the office – they updated the form of employees, but at the end of the month there was not enough money for basic expenses – salaries and rent. Continue reading