The flow of money into and out of a business
- Cash flow forecast is a prediction
- Cash flow statement is the actual
Two ways to improve cash flow within an organisation
- INCREASE SALE REVENUE
- REDUCE COSTS
Seasonality
Poor financial planning
Poor debtor management
Poor creditor management
Overheads unmanageable
Solutions?
- Increase selling price
is product elastic or inelastic?
- Finding a cheaper supplier
Damage company reputation
Damage brand loyalty
Hinder sales
- Pay wage not salary
People may not like wage - salary more secure.
- Invest your own money & no loan
Large scale investments cannot be obtained
Other solutions?
Overdraft
Short-term loan
Sale of Assets
Sale and lease back
Debt factoring