IMPROVING CASH FLOW AND PROFITS

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  • Created by: _Holly98
  • Created on: 15-04-16 19:50

CAUSES CASH FLOW PROBLEMS

OVERTRADING: EXPAND QUICKLY WITHOUT FUNDS 

TOO MUCH CREDIT: WIN / RETAIN CUSTOMERS TOO GENEROUS - UNABLE PAY BILLS

POOR CREDIT CONTROL: STICK AGREED BORROWING LIMITS / PAY ON TIME

INNACURATE FORECASTING: UNLIKELY 100% ACCURATE - FACE PROBLEM - OCCUR INEXPERIENCE / UNEXPECTED COSTS

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IMPORTANCE MONITORING CASH FLOW

SPOT PROBLEM EARLY STAGE

TAKE PROMPT & DECISIVE ACTION

SIGNIGCANCE UNEXPECTED FIGURES

ONE OFF OCCURANCE

SEASONAL VARIATIONS E.G. CHRISTMAS

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IMPORTANCE MONITORING CASH FLOW

SPOT PROBLEM EARLY STAGE

TAKE PROMPT & DECISIVE ACTION

SIGNIGCANCE UNEXPECTED FIGURES

ONE OFF OCCURANCE

SEASONAL VARIATIONS E.G. CHRISTMAS

CONTINUINING TREND

SELF CORRECTING

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METHODS IMPROVING CASH FLOW

IMPROVE WORKING CAPITAL: FINANCE AVALIABLE - PAY WAGES

TRADE CREDIT: PERSUADE SUPPLIERS OFFER CREDIT

OFFER LESS CREDIT: - RESULT LOSS CUSOTMERS

DEBT FACTORING - SELL BILLS UP 80% VALUE

SHORT TERM BORROWING: OVERDRAFT - EXPENSIVE / SHORT LOAN

SALE & LEASEBACK: SELL MAJOR ASSET =LOTS CASH - COMMIT REGULAR PAYMENTS

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CASH FLOW & PERFORMANCE

REDUCE BORROWING COST: IDENTIFY EARLY - NO NEED USE ALL OVERDRAFT - REDUCE INTEREST. EXCEED LIMIT = PENALTY CHARGES

GOOD RELATION SUPPLIERS: OFFER DISCOUNT PROMPT PAYMENT - REDUCE COSTS

PUBLIC RELATIONS: LOSE CONFIDENCE - NO ORDER = UNABLE TRADE

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IMPROVING PROFITS

REDUCE COSTS PRODUTCTION: FIRST POINT. MARGIN INCREASE - LOWER QUALITY / CUSTOMERS

INCREASE PRICES: CUSTOMERS ALTERNATIVE

IMPROVE EFFICENCY: REDUCE COSTS USE TECHNOLOGY

CAPACITY FULLY: SPREAD FIXED COSTS - REDUCING AVERAGE

QUALITY: NOT RIGHT = ADDITIONAL COSTS - EMPLOYEES COST

IMPROVE PRODUCTION: EFFICENT - REDUCE COSTS NEED TECHNOLOGY

ELIMINATE UNPROFITABLE ASPECTS: CLOSE DOWN MAKING LOSS = INCREASE PROFIT - REDUNDANCIES

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