Zaza

Best choice Worst choice

Trade credit Overdraft
Considering he opperates in an industry where he needs supplies
As Zaza seeks to improve its cash flow, opting for an overdraft
regularly (fresh lemons), they are used to maintaining up to date
could imply disadvantages for this private limited company due to
relationships with suppliers. This gives the company power over
its high financial cost associated with interests rates. Moreover, its
negotiations, gaining an advantage over choosing a better trade
important to highlight overdrafts are typically used in specific and
credit plan suited for their business. By maintaing a bigger marging
occasional financial needs, meaning that if the objective is to
between when debtors pay and payments are due, they will have
improve cash flow, relying on an overdraft could be innapropiate.
bigger windows of positive cashflow inside the business

2nd choice 2nd choice

Reducing working capital
Working capital refers to the amount of capital already available to
the business, it is the difference between resources of cash and
their short term debts. Reducing it would imply, limiting expenses
like the amount of raw material or finished goods sitting around in
inventories, which cost money. This could improve their cash
inflows, boosting their cash flow position.
Bank loan
A long term bank loan would not be appropriate considering their
current needs, which is the improvement of cash flow. By taking out a
loan, they will get into debt and start paying interests rates for a financial
problem that is fixable and more flexible to correct using financial
sources that dont require such commitment. Furthermore, if they wish
to expand in the future and take out a loan to do so, they will be already
paying one, placing them on a fragile financial position.