How to Improve Cash Flow

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Cash Flow: the movement of money into and out of the business

Cash Inflows:

Comes from: 

  • customers who buy their products
  • interest in bank accounts
  • renting out of factory units 

Cash Outflows:

Comes from:

  • wages paid to workers
  • raw materials
  • admin - heating, insurance 
  • taxes - VAT, income tax

Financial management: deliberately changing monetary variables like cash flows to achieve financial objectives such as improved cash flows

Changing cash inflow

Increasing sales revenues:

  • Usually most desired way to improve cash inflow
  • Sales revenue - average product price x quantity sold

Destocking:

  • Make a one-off reduction in stocks of finsihed products

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