Question

Determine ways to improve the cash flows of an organization by addressing the following questions: What...

Determine ways to improve the cash flows of an organization by addressing the following questions:

What methods can be used to speed up a firm’s cash inflows?

What methods can be used to delay a firm’s cash outflows?

What are some of the cash management strategies used by your organization or by organizations that you know?

Are there any ethical items to consider with any of these methods or strategies?

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Answer #1

1. The cash inflows may be sped up by changing the invoice terms and conditions. For example, the company may start offering discount on early payments i.e. instead of Net 30, it may quote 2% 10, Net 30. This may prompt buyers to pay early. The business may also change the way they accept funds. Instead of just accepting cash or cheques, they may expedite the inflows by opting for electronic payment. The imposition of fines for delayed payments may also help improving the inflows.

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