Cash Flow Problem (Creative Letter)

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Date: 18/12/09

From: Richa

To: Manuel, the owner of Gardener’s Green

Topic: Cash flow problem

Your company (Gardener’s Green) is clearly facing a cash flow problem because the cash flow of a business is the cash inflows and outflows over a period of time, and we produced a graph to see your forecasted sales revenue each month and it showed that your company does have a cash inflow but it’s only for certain months: April, May and September but during the months: January, February and March your cash inflow is at its least.  

I think the reason for why your cash inflow is at its least during particular months (January, February and March) is because it is winter time and so your business may not be busy at this period of time.  It is very important to fix this cash flow problem because if we do not fix this cash flow problem your business will not be able to make daily transactions and will be soon in a liquidity crisis.

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So, to solve this problem there are many solutions which can be put into action. Firstly, the obvious method to decrease cash outflow would be to reduce expenditure to improve your cash flow. The steps you can take in order to reduce expenditure are asking for a longer credit from your suppliers, so that you have time to pay for your expenses until cash is available.

Another method of reducing expenditure could be reducing the credit given to your customers, so you can receive the cash quicker and it could improve your cash flow because some businesses are very ...

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