Overtrading Flashcards
1
Q
What is it
A
business expands too quickly without the financial resources to back
2
Q
How can this be caused
A
sales made on credit
sig investment in operations
3
Q
what are some potential issues
A
low profit margins
use of overdraft
low capacity utilisation
increase in payables days
4
Q
how to overcome this
A
reduce inventory levels
scale back
lease equipment
favourable payment terms.. customers quicker.. suppliers longer
