Cash Flow Flashcards
what are some cash flow problems?
-Low Sales
-An increase in expenses, e.g. wages and electricity,
-A one off payment of new assets, e.g. machinery,
-A deficit closing balance, i.e. more money is coming out that going in,
-Money is tied up in inventory, e.g. inventory can’t be sold because it has gone out of date or our of fashion,
-Customers are not paying up in time, which can lead to bad debts,
-Suppliers are not giving the business credit, which is buying goods from suppliers but paying for them at a later date.
what is ‘Low Sales’?
sometimes there simply aren’t enough sales coming in, e.g. businesses will often face low sales in January and February as many customers are thinking about saving money or watching their outgoings after Christmas.
how can cash flow problems be resolved?
-introduce new marketing campaigns to increase sales,
-Cutting down on staff overtime to reduce wage cost (do not use ‘get rid of staff’ or ‘cut down on employee wage’ in your answers) ,
-Finding a cheaper supplier of raw materials or negotiating prices or a credit agreement to cut down the cost of purchases,
-Finding a cheaper energy supplier to cut down on electricity/gas costs,
-Using a bank loan/hire purchase/leasing to fund buying new assets,
-Selling any unnecessary assets that are no longer used,
