Cash Flow Problems
Symptoms (What do you see...)
- Lack of cash.
- High borrowing/debt service.
- Behind on payment to suppliers.
- Can’t make payroll.
- Bills paid late or unpaid.
- Purchases delayed.
- COD deliveries.
- Difficulty paying suppliers on time.
Causes (What you’ve got...)
- Too much invested in inventory.
- Margins too low.
- Lack of attention to cost/price ratio.
- Non-profitable sales promotions.
- Desire to offer “complete line” when some elements/products are not profitable.
- Sales motivated on gross sales, not profitable sales.
- High business costs for revenue being generated.
- Low sales.
- Excessive inventory or other assets.
- Slow paying customers.
Solutions (What might work...)
- Prepare a profitability analysis.
- Reduce cost/price ratios.
- Implement system to monitor cost & price data.
- Increase cash collection efforts.
- Cut costs.
- Negotiate material deliveries with vendors.
- Negotiate new vendor terms.
- Increase sales and marketing efforts.
More Inventory Topics
