Accounting and finance

1
Accounting and finance

• Managing cash flow problems

2
Solving cash flow shortages

• predicted cash shortages may be overcome by
  taking the following actions
• 1. Speeding up cash inflows
• negotiating shorter credit times given to
  customers (e.g. by offering a cash discount)
• credit management (e.g. chasing debts)
• debt factoring

3
Solving cash flow shortages

• 2. Delaying cash outflows
• negotiating longer credit periods with suppliers
  thus postponing outflows
• leasing and renting rather than buying fixed
  assets
• Cutting or delaying expenditure
• decreasing levels of stock
• Cutting costs
• Delaying purchases

4
Solving cash flow shortages

• Finding additional funding to cover cash
  shortages
• using an overdraft
• taking out a short-term loan
• sale and leaseback of assets

whichever measure is taken will have to be
effective in the short-term