Improving Cash Flow

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  • Created by: Soph
  • Created on: 26-05-14 13:36

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
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  • 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
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Importance of cash flow forecasts

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

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