Justify actions a business might take when experiencing cash flow problems? At first ,the owners of business need to start a cash flow analysis for current month and the future.The owners should know and find out what’s wrong with the company and check which areas result the most money to get out of their company.However, the receivables are always a big problem.Because the owners are busy with their business so that they forget to send the money for a long time . Secondly, they can use loan to solve the cash flow problem,they can borrow a great deal of money from the bank or other personal organizations, they can just give these organizations little interest per month but they get a pretty long-term support for the whole business.They should have their own line of credit, regardless of business or personal ,it’s function is similar with the credit cards.The company can have a source of emergency funds in the future as long as it pays long-term attention on building the credit line , which can solve the cash flow problems as well. Finally, it is important for the business owners to make some changes n operations ,For example ,the loans can not solve the fundamental problem because this situation is serious.The operator should reduce the time between a transaction and when receive the money . The business needs to accelerate the speed of sending it’s produces as well as invoices.In addition to that, the company can use the discount to attract the customer to pay early and enforce the punishment for late payment.If the customers pay by cash , then they will have cash discount and the point of transactions.Absolutely, the business won’t penalize those people who pay by card and credit card. How to prevent the situation for cash flow problems
As a formal business ,the operator should have a detailed financial book which keep up-to date records on the transaction between business ,customers as well as the suppliers.The company should stop selling if the customer...
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