Cash Flow Problems and Solutions

Question 1

Too much money tied up in stock

Answer 1

• use just in time stock control

* sell off stock through a sale

Question 2

Too many credit sales

Answer 2

•Offer cash discounts to encourage customers to pay in cash

Question 3

Too long a payment period for credit sales

Answer 3

•charge higher interest on credit sales to encourage customers to pay sooner

Question 4

Not enough credit purchases

Answer 4

• switch suppliers to those with interest-free credit available on purchases

Question 5

high amounts of spending on non-current assets

Answer 5

• pay for non-current assets in instalments such as vehicle hire using hire purchase

Question 6

increasing expense costs

Answer 6

• look for ways to reduce expenses ie selling online

Question 7

too many drawings from owners

Answer 7

• charge higher interest on drawings to discourage owners from withdrawing

Question 8

not enough sales revenue

Answer 8

• use marketing mix to encourage more sales

Question 9

too many unpaid debts

Answer 9

• sell debts to debt factoring companies