• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Cash Flow Problem (Creative Letter)

Extracts from this document...

Introduction

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. ...read more.

Middle

However, if you used that method it would be possible that you would lose your customers to competitors who offer a longer credit. If you do not want to reduce the credit given to customers and not take the risk of losing customers due to that, you could also factor debts that way immediate cash is made available and the risk of collecting the debt becomes the factor's. However, if you did choose the method of debt factoring you would have to keep in mind that you would not receive 100 per cent of the value of your debts, so it would be a good to use this method if you desperately need immediate cash for something. You could also lease out the land during the winter months (when you don't make cash inflow) ...read more.

Conclusion

However, it is hard to find new suppliers who know what exactly you are looking for. Also since, your work is only for a couple of months you should get seasonal workers instead that way you do not pay workers for the months when you do not need them, however your employees have been with you for the past four years and must have gotten very experienced so maybe finding seasonal and experienced workers would be a difficult job. According to me, I think the most beneficial solution to the cash flow problem would be to ask a longer credit from your suppliers as there would be no harm in doing so. Also another thing you should do is lease the land out in winter months as that is one of your main problem because you do not get much cash inflow during winter months and this solution could solve the problem of low cash inflow during winter months. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. Marked by a teacher

    cash flow

    3 star(s)

    1.800 1.800 1.800 1.800 gas and electric 700 700 700 700 loan repayments 800 800 800 800 Currently rent 2.500 2.500 2.500 2.500 Insurance 300 300 300 300 Advertising 1.900 1.900 1.900 1.900 Total Expenditure 14.000 14.000 14.000 14.000 Net Cash Flow -4.000 -3.000 -2.000 -2.000 Opening Balance 21.600 17.600

  2. annual cash flow forecast

    money and that would mean that we will be shot of cash. This will also affect us to plan for our future cash flows because some customer wont be paying on right time of which would live us with problem, because that would mean that we will not have enaugh money to upgrade our store.

  1. Management Accounting Report.

    � 5.07 Assembly 37 hours x 48 weeks x 18 members of staff = 31968 �104097 / 31968 = � 3.25 The problem that might come from this calculation is that not all the hours might be used from staff the reasons are: Staff might be ill Maternity leave Paternity leave Staff not supervised (waste of time)

  2. Preparation of a cash flow forecast

    In January Wooden Wonders did not have cost of sales, so this was a good start for the business but in February and March the net cash flow was negative, but this did not harm the cash flow because they had profit to back them up from January, in the

  1. What does Finance involve.

    And for my equipments in the kitchen I will shop form Argos as the quality is better and it has better offers then companies such as Home base or Woolworth. Toilet equipments 7 different items Max �6.00 �42.00 www.argos .co.uk I compared this company's price with Ikea's and EBay's and I found that Argos has cheaper costs.

  2. Identifying and describing the main financial service needs for a student starting at university

    So it could actually work out considerably cheaper than 0%, and it takes the pressure off paying back quickly. Up to 56 days' interest free credit if you repay your bill in full and on time each month. Also every time you use your Nat West credit card you'll get

  1. This report has been produced as evidence for Unit 9 - 'Financial Services' - ...

    So the mortgage could last more than 25 year Male Monthly premium You save over 10 years saving made Tesco �5.50 Scottish Widows �7.20 �204.00 Marks & Spencer �7.55 �246.00 Legal & General �7.80 �276.00 Eagle Star Direct �7.86 �283.20 Source: Life & Pensions Money facts, December 2002.

  2. Responsible accounting is the ability to conduct business in a way that is not ...

    Allocation type two is to allocate costs form one organizational unit to another unit when one unit provides products or services to the other unit, which then the costs are transferred along with the product and services. Some examples of this are the personal department and laundry department in the hospital.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work