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Business finance (Poor cash flow (Not enough cash to pay expenses, Staff…
Business finance
Poor cash flow
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Staff may not get paid on time, this means resentment and demotivation
Suppliers sometimes offer discounts for punctual payment, the business may miss out on these
Creditors may not be payed on time, meaning less leniency in the future
Creditors may take legal action to acquire the money they are owed, forcing a business to sell assets
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Overtrading - Too many orders may be taken on and the business spends money on more raw materials and staff, but the money doesn't come in quick enough
Poor decisions - The firm could produce new products or expand into new markets but not make the money they predicted
Improving cash flow
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Destocking, inflows will be the same but less money will be spent on raw materials
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Forecasting cash
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Timings of payments can affect it, for example if the customers are given 60 days credit to pay
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