What causes the poor cash flow of enterprises?

The main business activities and working capital management level of an enterprise will lead to poor cash flow.

1. Main business activities of the enterprise

In order to survive, enterprises must get cash to pay for all kinds of goods and services. The factors that affect the net profit creation of enterprises also affect the cash flow of enterprises. From a macro point of view, there are the business environment and geographical scope of the enterprise, including the value chain relationship with upstream suppliers and downstream distributors, the business scale and management level of the enterprise itself; From the microscopic point of view, the profitability, production technology and cost level of its products will affect the cash inflow and outflow of its main business, and directly affect the net cash flow of the enterprise. It can be said that the cash surplus created by business activities is one of the main signs of vitality of enterprises.

2. Working capital management level

Working capital is the working capital of an enterprise, which refers to the funds needed by an enterprise to maintain its daily operations. Generally speaking, it refers to the difference between current assets and current liabilities, which is basically equal to the balance of enterprise inventory plus accounts receivable MINUS accounts payable. Obviously, the extension of inventory time, the extension of product production cycle, the shortening of payment period of accounts payable and the extension of collection period of accounts receivable will all lead to the excessive occupation of working capital, which in turn will lead to a longer cash recovery cycle and affect the cash flow situation of enterprises.

Through high-level working capital management, we can realize a shorter cash recovery cycle and improve the liquidity of enterprises. In this way, by analyzing various factors such as inventory turnover period, average recovery period of accounts receivable, average payment period of accounts payable, we can find out the fundamental reasons that affect the unreasonable occupation of working capital.

How to solve the problem of insufficient cash flow in enterprises?

1. First, solve the problem of hematopoietic function of production and operation, and make the net cash flow generated by operating activities positive, so as to maintain the capital problem of the existing scale operation of the enterprise and let the enterprise make money.

First, design explosive products or sharp knife products according to the customer's situation, so that the products meet the customer's needs, and the products have customers and traffic;

Second, how to retain and regenerate customers;

The third is the ability of traffic conversion;

Fourth, products have gross profit, which can make enterprises make money.

2. Control blind internal and external investment, and make feasibility analysis and project feasibility demonstration before investment.

On the one hand, the project selection should match the main business;

On the other hand, do a good job in project benefit analysis and investment payback period analysis, especially the judgment of investment payback period should not be too biased; There are also suggestions to change the production and operation mode of heavy assets, revitalize existing stock assets and prevent funds from precipitating.

3. Create financing channels through multiple channels, especially debt financing channels, so that enterprises can solve working capital through short-term debt financing when funds are in short supply.

4. Shareholders shall put their capital contribution in place.

In short, enterprises still need to improve their internal operations, retain customers and traffic, especially the grasp of accurate traffic, and improve their cash flow and profitability through the transformation of traffic.