Solving cash flow problems
Cash flow problems can be solved in different ways:
| Solution | Justification |
| Find a cheaper supplier | This will reduce the cost of purchases meaning more cash available from each sale |
| Lease machinery or equipment | This allows a business to spread the cost of the purchase over many months |
| Sell any assets that are not being used effectively | This will release cash that can be used elsewhere in the business |
| Apply for a loan or overdraft from the bank | This will help to cover immediate cash flow problems but will need to be paid back over time with interest |
| Offer discounts to customers for paying up front or paying for goods quickly | This will encourage customers to pay quickly and reduce the number of people who owe the business money |
| Arrange extra time to pay bills from supplier (increase credit terms) | This will give the business time to raise the cash needed to pay bills |
| Increase advertising or sales promotion | This will increase sales meaning more cash coming into the business |
| Solution | Find a cheaper supplier |
|---|---|
| Justification | This will reduce the cost of purchases meaning more cash available from each sale |
| Solution | Lease machinery or equipment |
|---|---|
| Justification | This allows a business to spread the cost of the purchase over many months |
| Solution | Sell any assets that are not being used effectively |
|---|---|
| Justification | This will release cash that can be used elsewhere in the business |
| Solution | Apply for a loan or overdraft from the bank |
|---|---|
| Justification | This will help to cover immediate cash flow problems but will need to be paid back over time with interest |
| Solution | Offer discounts to customers for paying up front or paying for goods quickly |
|---|---|
| Justification | This will encourage customers to pay quickly and reduce the number of people who owe the business money |
| Solution | Arrange extra time to pay bills from supplier (increase credit terms) |
|---|---|
| Justification | This will give the business time to raise the cash needed to pay bills |
| Solution | Increase advertising or sales promotion |
|---|---|
| Justification | This will increase sales meaning more cash coming into the business |
