Cash flow Clue-doh! The Mystery is Revealed…

Over 1,500 colleagues have now downloaded our cash-flow murder mystery activity - Cash Flow Clue-doh! And we’re getting an increasing number of enquiries asking what the solution is!

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What business students can learn from how businesses have handled the recession

The actions taken by successful businesses during the UK recession provide a rich source of guidance for students wishing to improve their analysis and evaluation skills. 

Banks lend more and charge more at the same time

Commercial loans and overdrafts and other forms of credit for businesses are hugely important to sustain businesses fighting a recession or those in better shape and looking to expand. It is a truism that the UK economy will not engineer a durable recovery unless the international financial and economic backdrop improves. Increasing the availability of bank lending especially to small and medium-sized enterprises is another essential building block to an upturn in output and jobs.

In this sense the news that Barclays has lent £17 billion to UK households and business in the first half of 2009 - already outstripping the £11 billion target it set for the whole of 2009 - is welcome. But that figure hides the actual cost of servicing loans. Even if a business can maintain an overdraft facility or gain access to fresh credit, it is likely to be paying more for the privilege. The cost of debt can be as important as the supply. Here is a good video on Rhino Rugby a manufacturer of equipment for the rugby industry.

Given that thousands upon thousands of smaller businesses use credit cards as a way of tiding them over from month to month (something the business studies textbooks and exam boards seem strangely reluctant to recognise despite overwhelming evidence), it will come as little comfort to entrepreneurs to be paying upwards of 40 times base rate (policy rate) for their loans.

Q&A - Outline the main costs and benefits of inflation

Inflation has many important costs and consequences for both society and business. However a stable and low level of inflation also provides some upsides for business.

East Coast Rail Line is Nationalised

The government is taking the East Coast rail line that runs from London to Edinburgh and which has been operated by National Express into public ownership. National Express has struggled with falling revenues and higher costs that have contributed to rising losses on the line. In a press release, National Express said that higher hedged fuel costs added £11 million of cost in the first half of 2009, while increased pension costs cost the business a further £3 million.

Sources of finance - the bank overdraft rip-off

We got a letter from the Bank of Scotland last week offering us a very generous bank overdraft for the tutor2u business…

Sources of finance: PLCs turn to their shareholders

What do large, quoted companies do when they encounter problems raising bank finance and when they realise that their balance sheets are over-geared?  Have a rights issue...

Q&A - What is share capital

Share capital is the money invested in a company by the shareholders. Share capital is a long-term source of finance.

Q&A - How are businesses affected by changes in interest rates?

The effect of a change in interest rates will depend on several factors, such as:

• The amount that a business has borrowed and on what terms
• The cash balances that a business holds
• Whether the business operates in markets where demand is sensitive to changes in interest rates

Cash flow management - chasing the late payers

AS and A2 students are likely to come across a scenario or two where the case study business is suffering from slow payment of invoices by customers who bought on credit (so called “trade debtors").  An interesting survey out today suggests that small businesses in particular are being more aggressive in chasing up long-standing debts - as the need to maximise cash flow becomes the number one business priority…