Sarah is a business student who has just started her own small coffee shop. She is having trouble understanding the concept of cash flow and how it affects her business. She is worried about running out of cash to pay for her inventory, rent, and other expenses. She asks for your advice on how to manage her cash flow.

Sarah needs to create a budget that outlines her expected cash inflows and outflows. This will help her to predict when she may have cash flow problems and take steps to address them. She should also consider offering incentives to customers who pay their bills early or on time to improve her cash flow. Additionally, she may want to consider implementing an accounts receivable management system to keep track of payments and follow up on late payments.

1. What is the primary concern that Sarah, the business student, and coffee shop owner, has regarding her business?
2. Describe the difference between cash flow and profit, using Sarah's coffee shop as an example.
3. What are some potential consequences for a business-like Sarah's if it runs out of cash to cover its expenses?
4. What strategies could Sarah implement to encourage her coffee shop's customers to make timely payments for their purchases?
5. Why might it be important for Sarah to have a plan for handling unexpected expenses or emergencies in her coffee shop? Provide two reasons.