Cash flow 0.0 / 5 ? BusinessCash flowA2/A-levelAll boards Created by: lara__001Created on: 05-02-19 16:49 Cash flow ~ the amount of money being transferred into and out of the business. Net cash flow: cash inflows - cash outflows 1 of 6 Cash inflow examples: Cash sales Recievables/ receipts from trade customers Sale of assets Investment of share capital Personal funds invested Receipts of bank loans Government grants Receipts from factoring 2 of 6 Cash outflow examples: Payment of wages & salaries Payment of suppliers Buying equipment Interest on bank loan/overdraft Payment of dividends Repayment of loans Payment of leasing/hire purchase rentals Income tax, VAT & corporation tax 3 of 6 How to improve cash inflows: Incentivise (encourage) early repayment - give customers a discount for paying early Reduce trade credit given to customers Sell off stock at a discounted price to free up cash Inject fresh capital into the business Sell idle assets 4 of 6 How to slow down cash outflows: Delay payments to suppliers Increase trade credit agreements with suppliers Cut costs - find cheaper alternatives or postpone spending in areas such as training or advertising 5 of 6 Possible causes of cash flow problems: Overtrading Allowing too much trade credit to customers Unforseen costs Poor credit control Innacurate cash flow management 6 of 6
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