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Ways of Ensuring a Steady Cash Flow (Distribution of payments (accounts…
Ways of Ensuring a Steady Cash Flow
Discounts for Early Payments
(accounts receivables)
Why do it?
Increases cash flow in
Can be used for
Debts
Growth
An incentive to pay early
Factoring
Why do it?
Get awaiting money quicker
Can be used for
Debts
Growth
Increases cash flow in
The business is their awaiting cash receivables within 48 hours (but they lose a small percentage of it)
Distribution of payments
(accounts payable)
Regularly paying
Weekly
Fortnightly
Monthly
Why do it?
Ensures cash shortfalls do not occur
Large and sudden outflows do not occur
Identifies periods of high and low cash flow
Stretching payments (last day possible)