Finance unit- improving cash flow

Finance unit- improving cash flow

1. Causes of cash flow problems

   • - Seasonal demand- over estimation of sales- over investment in fixed assets- credit sales ( cant get cash)- poor stock management

2. Possible solutions to cash flow problems

   • BANK OVERDRAFT-ADVANTAGES
     • -easy to organise- flexible
     • DISADVANTAGES
       • -Interest rates are flexible.
         • -more expensive in the long run
   • SALE OF ASSETS- ADVANTAGES
     • - can raise large sums
       • -might not need the asset, so makes sense to sell it
     • DISADVANTAGES
       • -hard to sell quickly
         • -reduces capacity