In this assignment I will be looking at interpreting the cash flow forecast and explain the problems that the business faces from the forecast. I will be looking at 4 issues and describing why they are problems for the businesses based on the cash flow forecast and how that the can solve these problems.

The first problem that they face with from looking at the cash flow forecast is that they have a negative bank balances in most months, from looking at the forecast the organisation there closing balance in January is -£1,500.00, in February they have a closing balances of -£3,500.00, in march they have a closing balance of -£1,000.00, in April they have a closing balance of -£3,500.00, in may they have a closing balance of -£3,500.00, in July they have a closing balance of -£1,000.00, in August they have a closing balance of -£1,000.00, in September they have a closing balance of -£1,000.00, in October they have a closing balance of -£1,000.00 and finally in November they have a closing balance of-£1,000.00. If they are expecting this throughout the year this will lead them to not be able to pay for their rent which is £5,000.00 every 3 months and also the purchase of costs which is £5,000.00 every month.
The way in which they can fix this problem is by taking out a overdraft this affectively means that they take out more money than the organisation has and slowly paying the bank back with interest. They could also take out a loan this is a less affective way because the business will have to pay back a high interstate rate. By taking out an overdraft in the months where they have a negative bank balance they are able to pay for their rent and purchase of stock this will enable them to pay back there overdraft in December were they are making money.
The second problem that they face is that in the January they already spend more money they have I cash