13. Problems with Cash Flow

13. května 2009 v 15:32 |  AJ
13. Problems with Cash Flow

1. Introduction
2. Branch analysis
3. Terms of payment
4. Advice for business

1. Introduction
Managing Cash Flow is about making sure you have money coming in to finance the costs of the goods and service you are producing.
If you are a small business, the chances are that for every 100 crown you owe, others owe you 155 crown. In CZ you wait to 14 days to get paid (2 weeks). On the other hand, you are probably waiting up to 12 weeks to get paid while you making business with foreign country. It is not right.

Cash flow is difference between entry and issue.

We can separate cash flow into operation and investment and financial.
In to the operation cash flow entry from selling goods or services or from seling money lent, tax-expense, interest for example.
In to the investment cash flow acquisition (pořízení) and selling longtime holding (majetek).
In to the financial cash flow longtime liabilities eventually short-time liabilities.

2. Branch analysis:

This is branch analysis or Porter's five factor of Rivalry among competitors.

Threat entry of new competitors= hrozby vstupu nových konkurentů
Jak snadné nebo obtížné je pro nového konkurenta vstoupit na trh?
How easy or how difficult is it to come in market for new competitor?
Bargaining power of suppliers= vyjednávací síla dodavatelů
Jak silná je pozice dodavatelů? Jedná se o monopolní dodavatele, je jich málo nebo naopak hodně?

How hard is it position suplliers? Is it a monopoly supllier? How much is it?

Bargaining power of customers= vyjednávací síla zákazníků
Jak silná je pozice odběratelů?

How hard is it position customer?

Rivalry among competitors= konkurenční prostředí
Je mezi stávající konkurenty silný konkurenční boj?

Is it hard competitor´s conflict between existing competitors.

Threat of substitutes= hrozba substitutů
Jak snadno mohou být naše produkty a služby nahrazeny jinými?

How easy may be our products and services supply by others.
3. Terms of payment
There are 4 basic terms of payment in foreign trade.
1. Payment in advance (down payment) (předčasně).
2. Payment by means of L/C.
3. Payment after delivery.

Payment in advance (platba předem)
It is usually effected (způsobený) by a mail or transfer from the buyer's account to the seller's banking account.
a) In the export trade payment in advance is the most favorable for the seller because the risk of non-payment for the goods is totally excluded. But payment in advance is not too frequent in foreign trade because the buyers are generally (obecně) unwilling (neradi) to pay for the goods before they can lay hands on them. If they agree to it they insist on a special discount on the price.
b) In the import trade on the other hand payment in advance is the least advantageous of all terms of payment because it is a credit transaction with all its risks.

A letter of credit - L/C
It is the most current and one of the best means of payment. The buyer instructs his bank to open an account with a bank in the seller's favor (přízeň). Irrevocable (neodvolatelný) L/C means that it cannot be recalled before the date of expiry ... (uplynutí)
In foreign trade payments are usually made by irrevocable L/C against shipping documents.

Payment on credit (na úvěr) - payment after delivery. (platba po dodání)
In the export trade selling on credit is usually the worst term of payment. After the buyer has taken possession (vlastnictví) of the goods it depends only on him when and how much he will pay. It is difficult for the seller to force him to do so often even by legal action. Therefore before the buyer is granted credit the seller must get a complete Credit Report (informace o úvěroschopnosti). It is information about his financial standing, yearly turnover (roční obrat), and regularity of payments to other sellers. If the seller does not find the buyer reliable (spolehlivý) enough, he either insist on another term of payment or he asks for banker's guarantee.


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