How to Improve Cash Flow

How to Improve Cash Flow

1. A cash flow forecast allows businesses to see where they will be financially in the coming months

2. The business may use the forecast to spot and deal with any future problems

3. It is vital for a business to have a good cash flow

4. Net cash flow = Cash inflow - Cash outflow

5. Closing bank balance = Starting bank balance + Net cash flow

6. How can cash flow be improved?

   • Increase Cash Inflow
     • Get customers to pay in cash
     • Get customers to pay straight away
     • Keep a low stock level
     • Obtain an overdraft
   • Decrease Cash Outflow
     • Sell under-used assets
     • Spread large costs over a longer period of time
     • Negotiate longer trade credit terms with suppliers