Improving Cash Flow - Unit 3

Question 1

What are the 2 things you can do to improve cash flow?

Answer 1

Increase inflow, reduce outflow

Question 2

What is an inflow?

Answer 2

Money coming into the business

Question 3

What is an outflow?

Answer 3

Money coming out of the business

Question 4

What is negative net cashflow?

Answer 4

When there is more money coming out of the business than is coming in

Question 5

Name two ways of improving cash outflows? (5)

Answer 5

• Delay paying invoices
• Leasing rather than buying
• Reduce stock orders
• Improve credit terms with suppliers
• Use cheaper suppliers

Question 6

Name two ways of improving cash inflows? (5)

Answer 6

• Increasing sales revenue
• De-stocking
• Reduce credit terms with customers
• Encourage customers to pay early (incentives)
• Use short-term sources of finance, e.g overdrafts and short-term loans