Advise VALCOs management about possible ways of managing a cash Essay

Advise VALCOs management about possible ways of managing a cash deficit in the short and long-term - Essay Example For example, the actual cash disbursements exceed budgeted cash out flow for wages and taxes, amount payable for supplies, or even dividend payments to shareholders. This being said, a firm usually prepares a cash budget before time to forecast the cash disbursements and receivables it will realize in near future. The cash inflow is subtracted from cash outflow (or payments) and the result is a cash deficit or a cash surplus depending on which amount is higher than the other. A cash deficit, when not financed, will carry over the next period. Consistent deficits of the cash budget reflect inefficient cash management, and because cash is an important resource, it has to be managed effectively. There are many ways to manage a cash deficit in the short term. Short term means a period of one year or less. Valco has two options to finance its cash deficit in the short term. The first is through making some changes internally and second is using external means to finance the deficit. By internal changes what is meant are changes in Valco’s policies. First, the company must strive to reduce the debtor cycle. Debtor cycle refers to the number of days it takes debtors to pay for the credit sales. Quick recovery from debtors will ensure that cash is not tied up in the form of account receivable and is free to be used to pay other expenses. Another option that Valco has is to reduce its credit sales. This however, does not come without repercussion as it may mean a reduction in overall sales revenue if Valco stops giving the option of credit to its customers. Valco can try to reduce its credit sales (and hence the amount tied up in debtors) by offering cash/trade discounts i f the customers pay in cash at the time of transaction. This will encourage cash sales and therefore a flow of cash payments. (Davoren, n.d.)Also, as the evidence from the question suggests, the raw material stock was increased for the second month, this means

E-commerce LAW Essay Example | Topics and Well Written Essays - 500 words

E-commerce LAW - Essay Example In ecommerce transactions, the customer would be able to see the product only after it reaches his home. On the other hand, if the customer purchases a product from the shop, he can physically check the performance or quality of the product before purchasing. Moreover, instant purchasing is impossible with internet purchasing. A customer has to wait a lengthy period for the arrival of the product if he/she opts for internet purchasing. On the other hand, purchasing from stores will help the customers to own the product immediately after the payment is made. Another major drawback associated with ecommerce is the difficulties in returning a defective good. In conventional purchasing, if a product found defective, the customer can immediately return or replace it. On the other hand, ecommerce do not offer such convenience to the customers. Even though human interactions are available while executing an internet purchase, personal service cannot be expected as in the case of purchasing a product from a store. â€Å"E-commerce is most often conducted using credit card facilities for payments, and as a result very small and very large transactions tend not to be conducted online† (Ecommerce disadvantages and constraints, n. d.). Most of the ecommerce purchasing are done with the help of the credit cards. But giving or revealing credit card numbers to a distant dealer through internet is not safe. Hackers are hyperactive on internet so that the credit card numbers used for purchasing products through internet can be easily exploited by