Short trade credit
Long debtors period
Outflows more than inflows(mismanagement of working capital)
Decline in sales
Solutions to cash flow problems
Slow down expansion
Prolong trade credit
Shorten debtors period
Get rid of stocks (JIT)
Sell idle assets
Improve the working capital cycle
Increase sales by promotion and advertising
It seems that the business has liquidity problems which are indicated in the negative closing balance, along the 6 months starting from june and ending in November. This might be diue to tha fact that the donations are declining in certain months.A huge percentage of the donations goes to educationakl projects, also the expenses are very high, such as the internet frees and the web dsigner fees, not to mention that the sonsership expenses are very high and are not spread along the months, they are concentrated in one month which is is November which results in more cashflow problems.
Benefits of cashflow statenments :
It shows future estimations of inflows and outflows.
It helps the business predict future cashflow problems inordert to find ways to show those problems.
It is a progressive method that helps the business plan ahead and organize and utilize its working capital.
It shows different stakeholders ( internal eg.managers, directors and shareholder) and external shareholders such as banks and potential investors.
It shows the liquidity position of the business.
Spread out the payment.
Negotiate lower intwrest rates
Give customers discount if they paid in time.
Since those cashflow statements are based upon estimations and predictions which might be inaccurate.
Those statements are based upon financial calculations and it might not take into consideration the external factors such as political, economical, social and technologica.