1, unsalable, accounts receivable. If the sales of enterprises are mainly on credit, and the cash payment cycle is long, it will lead to a low proportion of cash in sales income, and the cash inflow will not be enough to pay all operating expenses, resulting in a negative cash flow from operating activities.
2. The inventory backlog is serious. If the sales of products produced by enterprises are difficult and the sales cycle is long, which leads to the backlog of finished products, then enterprises will invest more money to buy raw materials and pay labor costs, but the sales return is relatively lagging behind, which will also lead to negative cash flow from operating activities.
3. The operating expenses are too high. If the enterprise is poorly managed and the expenses are out of control, which is obviously higher than the sales revenue, then the final operating activities will produce a large amount of cash outflow, resulting in negative cash flow from operating activities.
4. Business performance is sluggish. If the sales performance of enterprises is generally depressed, the sales revenue and profits drop sharply, and it is difficult to keep the cash flow of operating activities positive or negative when the expenses are difficult to drop rapidly.
The cash flow from operating activities is negative, reflecting that the cash outflow from operating activities exceeds the cash inflow, and there may be problems in sales return and profitability. Enterprises need to speed up the collection of accounts receivable, reduce inventory backlog, control expenses and improve sales performance according to specific conditions, so as to improve the cash flow of business activities and ensure the normal operation of enterprises.
Improvement measures:
1. Improve the sales strategy and speed up the sales collection. Enterprises can increase the cash inflow from business activities by increasing the proportion of cash received from sales and shortening the credit period. At the same time, adjust the sales strategy, develop cash sales customers and increase cash sales income.
2. Actively recover accounts receivable. For the accounts receivable that have expired, the enterprise should follow the principle of "earnest, prompt and patient" to collect them, and if necessary, it can urge them to repay them through legal means. We should strictly control the credit period of new customers to avoid bad debts.
3. Reduce inventory level and release cash. Enterprises should strengthen the monitoring of inventory, avoid the backlog of finished products and raw materials, increase sales promotion and speed up the turnover of inventory sales. If necessary, the production quantity can be appropriately reduced and cash can be invested in finished products.
4. Strictly control costs and improve operational efficiency. Enterprises should systematically sort out various costs and expenses, reduce wasteful expenditures and strictly control budgets. At the same time, it is necessary to optimize business processes, improve the efficiency of capital use and reduce the amount of capital occupied.
5. Improve profitability and operational quality. Enterprises should adjust product structure and price and develop high-profit products. At the same time, strictly control the production quality, ensure the high quality of products and services, improve customer satisfaction and repurchase rate, thereby increasing sales revenue and profits and improving cash flow.
Suggestions on managing cash flow
1. Increase the source of cash inflow. Enterprises can increase cash inflow by expanding sales scale, raising sales price, recovering accounts receivable and disposing of idle assets. Rational use of various financing channels and moderate increase in borrowing are also one of the ways to increase cash inflows.
2. To control the scale of cash outflow, enterprises should strictly control all costs, especially the recurrent expenses such as production costs and sales expenses. At the same time, excessive investment and extravagant promotion expenditure should be avoided, and unnecessary capital expenditure should also be limited. Grasp the short-term repayment opportunity reasonably and try to delay the cash outflow.
3. In order to increase the cash liquidity, enterprises should speed up the sales collection, shorten the collection cycle and strengthen the recovery of accounts receivable. At the same time, it is necessary to further speed up inventory turnover and reduce cash in finished products, spare parts and other long-term inventory. In addition, it is necessary to regularly clean up realizable assets and release cash.
4. Reasonably arrange the term structure of cash flow. Enterprises should arrange an appropriate cash flow term structure according to the actual situation such as sales payment period and purchase payment period, try to make the cash inflow period shorter than the cash outflow period, and ensure sufficient cash liquidity reserves. This requires accurate prediction of the time and cycle of various cash expenditures.