As a Financial Manager, what steps would you take when your company is going through a risky cash flow statement?

Here are my recommendations:

1 - For RECEIVABLES/ CASH INFLOWS

• Collect old and new outstanding debts (ASAP).
• Negotiate better payment terms with customers - i.e. give discounts for prompt payment, encouraging automated payments instead of cheques, requiring new clients an Advance payment/ deposit before delivery of goods or services.
• Sell some assets for cash
• Borrowing money - refinance or overdraft from bank.
• Factoring outstanding receivables to bank or financial institution.

2 - For PAYABLES/ CASH OUTFLOWS

• Negotiate better payment terms with suppliers - i.e., delaying payment in exchange for regular or bigger orders.
• Prioritize settlement of outstanding debts.

3 - Reduce expenses

• Avoid unnecessary cash outlays.
• Delay any salary increment.
• Engage in rental of equipments instead of purchasing outright.
• Reduce overheads and all other costs as much as possible.

4 - Increase selling prices of products or services

5 - REGULAR MONITORING AND FORECASTING OF CASH FLOWS

 

I would like to answer in short and simple way.

Extend your Payables Period and Minimise your Receivables period.

Other way for utility Bills payment we can use corporate credit card.

To increse Sales we can apply Mark Down of prices.

For early receiving we can give discounts to Customer.

Sale your unwanted assets.

 

Prepare cash flow projections and an accurate cash flow projection can alert you to trouble well before it strikes.

Maintain some cash reserves.

Collect receivables asap.

 

Extend your payables as long as possible

Tracking inventory carefully, which sells quickly and what sits for long time.

An organization whose financial statement is unstable must have the following solutions:

1. Monitor all cash inflows and outflows, knowledge of debt maturities and various costs.

2- Conducting financial audit of the financial budget accounts.

3. When the financial element that led to the financial effect is discovered, we calculate the value and degree of risk.

4 - We cover the danger so as not to cause a higher risk

Thanks for invitation,

As a Financial Manager I have to:

1- Review "Credit Policy" toward our clients to minimize credit period and allowances ( i.e Accounts Receivable).

2- Review " Credit Policy" with our suppliers in order to maximize credit period and allowances (i.e. Accounts Payable).

3- Review "Collection Policy" to accelerate due payments from clients and to avoid any bad debts.

4- Review the "Inventory Policy" in order to maximize inventory's investment.

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·         Accounting records update - To help warn for any impending cashflow crises oridentify the potential cashflow problem 

·         Effective negotiations with customers

·         Credit Control to ensure customer can pay you on time

·         No over trading 

·         Effective negotiations with suppliers

·         Negotiations for credit terms and prices, make sure that suppliers are not overcharging or taking too long to deliver the material.

·         Switch over to new suppliers with better prices and credit terms but no compromise with quality.

·         Inventory controls

 Production efficiency – Delivery of all orders should be on time to get the payment as per agreed terms to improve the cash flow

 Effective Marketing strategy - Sales team work, Sales terms and condition should be clearly mentioned in marketing material and easy to improve the sales and payment process.

 

·         Overheads Control/ Cost Control- Review the overheads, payroll, utility bills rent, travelling. 

Even after controlling these, cashflow forecast may still suggest potential cashflow problems. Consider temporary finance facilities and negotiation with bank for better rates

 

I agree with previous answer

Company should measure cash flow in a precise manner. If there is any chances of failure in financial obligations, it should take care in advance like taking bridge loan etc because credit worthiness is of immense value. Finding out the reasons of risk and process to mitigate those risks. Always maintaining cordial relationship with bankers, financial institutions. Taking steps to expedite cash collection by giving prompt payment discount etc . However, these are not exhaustive measure but a guidelines.