Predictable?

1. Causes of Cash Flow Problems Overtrading Over-borrowing Overstocking Unforeseen changes Can see problems far in advance Poor credit control Hard to predict Predictable? Overtrading Overstocking Unforeseen changes Poor credit control Fully under management control Mgt. has no control Over-borrowing Controllable?

2. Solutions for Cash Flow Problems Sale Leaseback Seek better credit terms Better stock control Reduce waste Lease not buy Late payment Large upfront cost Alt. supplier:- Lower quality- Lower price only ST Bank Financing Sell dormant assets No upfront cash outlay Cut pricesRaise prices Improved marketing Expand product portfolio Debt factoring Tighter credit control Cash only Cost Alt. supplier:- Lower quality- Lower price only Sell dormant assets Reduce waste Late payment Expand product portfolio Seek better credit terms Immediate effect Long delay before effect Lease not buy Tighter credit control Sale Leaseback Better stock control Improved marketing Debt factoring Cut prices Cash only Raise prices Timing Seek better credit terms Better stock control Sale Leaseback Lease not buy Expand product portfolio ST Bank Fin. (liquidity crisis) Sell dormant assets Alt. Suppliers- Price only ST Bank Fin. (normal times) Alt. Suppliers- Lower Quality Guaranteed cash Maybe cash/ Maybe not Late payment Cut pricesRaise prices Reduce waste Tighter credit control ST bank financing Improved marketing Cash only Likelihood It Works Better stock control Late payment Seek better credit terms ST bank financing Reduce waste Alt. suppliers:- Lower quality Sale Leaseback Alt. Suppliers- Price only Long-term benefits Long-term problems Expand product portfolio Tighter credit control Lease not buy Cut prices Raise prices Improved marketing Sell dormant assets Cash only Short-Term / Long-Term Trade-Off