Define cash flow and explains ways in which a business can improve its cash flow.

Cash flow is the the movement of money coming in and out of a business on a day-to-day basis. It can be improved through selling assets, cutting costs, reducing current assets and increasing current liabilities. Selling spare or surplus assets will give the business a short-term boost of cash inflow. Cutting costs can be done through making staff redundant as this will reduce cash outflow. Managing current assets and liabilities can help improve cash flow through delaying payments to suppliers or reducing the credit period offered to customers. However both of these have consequences as they can be damaging to relationships. This type of question will typically be asked in relation to a case study. The best way to approach answering this is to define a cash flow, provide ways in which the business can improve its cash flow through apply it specifically to the case study and analyse why the cash flow might improve.