Page 202 - 5.2 i. Manac Finance ITC Summarised Notes

MANAGEMENT OF WORKING CAPITAL

Cash Management

• Ways of relieving cash flow problems include the

following:

• offering settlement discounts to debtors
• factoring debtors (although this is a drastic and expensive step!)

• increasing the bank overdraft

• reducing inventory levels, thereby reducing holding costs

• extending creditor payments
• selling assets that are not earning sufficient returns

• enter into sale-and-leaseback agreements

• not paying dividends
• not undertaking (or extending) routine asset replacements

• negotiating with the SARS to pay off taxes due, over a specified
period

• cost cutting

202