1. Year 12 AS Business Studies Improving cash flow

2. Causes of cash flow problems Seasonal demand Lack of planning (eg stock management) Over-investment in fixed assets Poor credit control Allowing customers too long to pay debts Overtrading Unexpected events

3. Main ways to improve cash flow: Increasing cash inflows Bank overdraft Short-term loan Debt factoring Sale of assets Sale and leaseback

4. Other ways to improve cash flow: Reducing cash outflows Reduce credit terms to customers Delay payments to suppliers (creditors) Delay spending on capital equipment Use leasing not outright purchase of capital equipment Cut overhead spending that does not directly affect output, eg promotion costs Finally…sell more!

5. Your task… In groups of 3 – you will be allocated one of: –Bank overdraft; Short-term loan; Debt factoring; Sale of assets; Sale and leaseback As well as one of the following: –Reduce credit terms to customers; Delay payments to suppliers (creditors); Delay spending on capital equipment; Use leasing not outright purchase of capital equipment; Cut overhead spending that does not directly affect output, eg promotion Produce a brief presentation / notes of: –What / Advantages / Disadvantages of your areas