DB Post 1

Every Company needs to ensure they have cash flow coming in to keep the Company alive and operating. While businesses work hard to achieve their financial goals not only internally but also for their stakeholders, there are several key elements to help maintain and grow the Company successfully. These key elements in turn will also help businesses that are struggling financially while trying to launch their new product in the next few years. 

According to “7 Ways to Improve Your Business Cash Flow,” there are seven key elements that focus on strengthening the cash flows for the Company. These include creating a cash-flow forecast, set up a payment policy, stretch out payables, use online tools, manage inventory, reduce overheads and finally have a backup plan. (“7 Ways to Improve Your Business Cash Flow,” 2017). Starting with a cash-flow forecast will offset any unpredictable offsets, spreading out investments, marketing and loans. Setting up a payment plan will help speed up the cash flow coming in with a short term payment plan. Managing the Company’s inventory is also a great way to help improve the cash flow while maintaining only what is needed in stock and the right kind of stock to increase sales. Having a backup plan is crucial for most if not all Companies in case any unexpected situations or emergencies arise and will need that line of credit.

Keeping the stakeholders happy can be a demanding job but is also imperative for the present and future of the Company. Communication is top priority with stakeholders so that the unexpected is expected. It is also important to listen to the stakeholders within each of their job roles so that each member is on the same page and the new product that will launch in the near future will be a successful product for the Company and the stakeholders.

 

References

7 Ways to Improve Your Business Cash Flow. (2017, April 21). Retrieved fromhttps://quickbooks.intuit.com/au/resources/small-business-finance/7-ways-to-improve-your-business-cash-flow/

DB Post 2

“Cash is king” is an expression that is common in many businesses today. The phrase is vital in determining the overall performance of the business. Investors often use the expression to decide whether it is worthwhile to invest in a given company. The potential shareholders often have to find out the amount of cash flow in a firm, which, in turn, helps them make wise decisions regarding the investment opportunity (Robinson & Sensoy, 2016). A business that is running out of cash often scares potential investors away. Nevertheless, companies may suffer a decrease in cash flow due to various factors that include the creation of new projects, capital budgeting, and paid wages and salaries. When that happens, a chief financial officer must identify various ways to maintain the running of a firm. Although it is a difficult task to keep the shareholders happy when there is no money, it is an important measure as it builds trust. It is quite challenging to deal with shareholders during low cash flow given that a part of the cash flow is the amount of money that goes to them during a reporting period (Robinson & Sensoy, 2016).

The product the company wants to invest in will not bring in any money until well over two years. Also, the business will run out of money in the next six months, which is quite unfortunate since the shareholders want to see positive cash flow. Still, there are various ways to address the situation. For instance, the company should consider acquiring loans from banks. The loans can help keep the company afloat despite the decrease in cash flow (Harford, Klasa, & Maxwell, 2014). Still, we should ensure to pay up as soon as we make the necessary profits. the company must also avoid future instances of borrowing. the word of God discourages us from borrowing. “The rich rules over the poor, and the borrower is the slave of the lender” (Proverbs 22:7 ESV). Other than getting a loan, I would also consider giving discounts to companies that pay early. Slow invoices can often lead to the closure of a business if there is no money available to cater for business expenses.  To keep the shareholders happy, I will have to demonstrate proper planning and show that the money I received as a loan is going on to improve the financial position of the company. Restoring shareholder confidence is key to maintaining a strong relationship with them.

 

References

Harford, J., Klasa, S., & Maxwell, W. F. (2014). Refinancing risk and cash holdings. The Journal of Finance, 69(3), 975-1012. doi:10.1111/jofi.12133

Robinson, D. T., & Sensoy, B. A. (2016). Cyclicality, performance measurement, and cash flow liquidity in private equity. Journal of Financial Economics, 122(3), 521-543. doi.org/10.1016/j.jfineco.2016.09.008