How can a business improve cash flow?
Increasing cash inflows
Chasing Debtors: Getting the people who owe you money to pay it or give them a shorter credit period
Arranging loans: securing bank loans to help keep the business going in difficult financial times.
Arranging an overdraft with the bank: this would hep a business if they find themselves in a short term cash flow crisis.
Reducing cash outflows
Stopping customers not paying
Establish debt chasing procedures
Conduct Credit Checks on Customers
Delaying your payment of bills: arranging to pay your bills when you can afford it instead of using you savings or getting loans.
Increasing Pricing
Delaying buying expensive equipment: businesses should wait until they have enough money to buy equipment otherwise their cash outflows will be high.
Selling Assets
Securing better trade credit deal terms: agreeing to pay a supplier over a longer period of time.
Wage cuts: letting employees who are non essential go or reducing wages (however this can put a strain on the remaining workers)
Main causes of cash flow problems
Seasonal demand
Too much stock
Low Profit
Allowing customer too much credit
Overtrading
Unexpected change
Seasonal demand
Advantages of having good cash flow
How to handle Cash Flow Problems
Money at hand to pay expenses
Have an accurate cash flow forecast
Invest in new equipment
Expand your business
Choose the right financial source
Diversification of products
Use your working capital effectively
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Destock
Get rid of the stock in business
Decreasing price
Turns in wanted things into cash
anything the business owns
risk - may need their assists
look at seasonal trends to plan for the future