Improving Cashflow: Inflow and Outflow

Question 1

What methods can be used to improve cash inflow?

Answer 1

• Overdraft
• Short-term loan
• Debt factoring
• Reducing credit terms
• Credit control

Question 2

What methods can be used to improve cash outflow?

Answer 2

• Delaying payment to supplier
• Stock management
• Reduced overhead spending

Question 3

What are the difficulties in improving cash flow?

Answer 3

• Damage to firms reputation.
• Potential loss of customers if payment terms affect competitiveness.
• Administrative costs and time.
• Loss of discounts or need to offer discounts.
• May affect profitability, only receive part of debt or more expensive to lease assets in the longer run