Improving Cash Flow

Refers to the inflows and outflows of cash into a business.

Major Causes:

• Overtrading-where a business expands too repidly without sufficient financial base
• Too much money tied up in stocks
• Too much credit
• Unexpected changes in demand for their product
• Overborrowing-therefore having large monthly loan repayments which have to be met

• Offering price discounts to boost sales
• Selling off fixed assets-fixed asset is a tangible aassets-physical substance
• A sale and leaseback arrangement
• Chasing debtors
• Selling off stocks

Be prepared for months in which it will experience a shortage of cash.

Also, in cash-rich months, the business can use this moeny profitably elsewehere