1.3.3 - Importance of Cash

Why do most businesses fail?

• Lack of cash

• Poor marketing

• High competition

• Bad location

What is the first reason cash is important for a business?

• To pay suppliers, overheads, and employees

• To invest in new products

• To expand the business

• To advertise the business

Why is paying suppliers on time important?

• To get discounts

• To maintain a good relationship and favorable credit terms

• To increase sales

• To reduce taxes

What can happen if employees are not paid on time?

• They will ask for a raise

• They will stop working for the business

• They will take more breaks

• They will work harder

What are examples of overheads that need to be paid?

• Product development

• Rent, electricity, and insurance

• Customer service

• Marketing and sales

When is cash particularly important for a business?

• During holidays

• During startup and rapid growth

• During product launches

• During economic downturns

What is a good strategy to manage cash flow?

• Negotiate credit terms with suppliers

• Reduce employee salaries

• Pay suppliers immediately

• Avoid taking loans

What is the difference between cash and profit?

• Profit is the total revenue

• Profit is the money left after all costs are paid

• Cash includes only sales revenue

• Cash is always profit

What can a business do to ensure it has enough cash?

• Stop paying suppliers

• Invest all cash in new products

• Have an overdraft arrangement with a bank

• Pay employees less

What is the ultimate consequence of not having enough cash in a business?

• Higher profits

• Business failure

• Better employee performance

• Increased sales