Cash flow problems Flashcards
1
Q
Problems with Cash Flow Forecast
A
Outflows greater than inflows
Inconsistent cash flows throughout the year (cash flow cycle) for seasonal businesses
2
Q
Overdraft Arrangements DESC
A
making an arrangement with the bank for periods of negative cash flow. Needs to be pre agreed, going overdrawn with no agreement is very expensive.
3
Q
Negotiating terms with creditors
A
try to negotiate a longer payment term with its suppliers eg pay for supplies after 60 days rather than 30 days. A disadvantage is that the business may lose a discount for prompt payment.
4
Q
Reviewing/Rescheduling capital expenditure
A
business could postpone plans to invest in machinery etc or could find an alternative way to pay such as hire purchase to spread the cost of repayments.
