Cash Flow

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  • Created by: bella
  • Created on: 06-02-14 12:30
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  • Cash Flow
    • importance of cash flow
      • A business can be profitable even if it runs out of cash.
      • If a businesses outflows are greater than its outflow then it could run out of cash and trading will stop.
    • Improving Cash outflows
      • delay paying invoices
      • Leasing rather than buying
      • Reduce stock orders
      • Improve credit terms with suppliers
      • Use cheaper Suppliers
        • Lower quality material
    • Improving cash inflows
      • Increasing sales revenues
      • De-stocking
      • reduce credit terms with customers
      • Encourage customers to pay early
      • Deals/incentives
      • Loans
      • Overdraft
    • Poor Cash flow
      • Not enough cash in the business to meet its day to day expenses - lack of working capital
      • Staff may not get paid on time
        • resentment and poor motivation
      • Creditors may not get paid on time.
        • Stricter terms in the future
        • Some may seek legal action
          • possible bankruptcy


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