To be able to operate in any way, all businesses rely on the availability of cash to fund their operations and activities. Without the necessary flow of cash, it would be impossible to procure the materials necessary to support production, which in turn would not enable the business to hold appropriate stock levels to satisfy customer demand. Furthermore, without available cash it would not be possible to settle the accounts of suppliers, causing the stream of raw materials to dry up and thus ceasing the production of future goods.  All in all, a very gloomy prospect

However, this need not be the case if appropriate steps are taken to ensure that sufficient cash is available to deal with the day-to-day demands placed on the finances of the business. Working capital provides the buffer necessary to maintain the steady operation for a business

In this module, we assess the importance of cash and examine the processes involved in the working capital cycle. The need for efficient financial management is described and the importance of the financial statements of a business is stressed. We

also discuss the key role played by effective stock control in ensuring that customer demand can be fulfilled but without the need to hold excessive costly levels of both raw materials and completed goods

The final sections of the module look at the sources of finance that are available to a variety of businesses and examine the value of using budgets as a means of controlling expenditure