Lawrence Sports, Inc.
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Table 1
Issue and Opportunity Identification
Issue
Opportunity
Reference to Specific Course Concept (Include citation)
Concept
Lawrence Sports cash flow problem needs immediate attention before things get out of control.May is a valued customer and Lawrence is in need of immediate payment. Mayo has promise to pay all outstanding invoices, but have not kept their promises.
Planning the cash flow will reduce the burden on the their future finance and forecasting options for Mayo to make payments.
“Cash flow comes from collections on accounts receivable.Most firms keep track of the average time it takes customers to pay their bills” (Brealey, Myers, & Allen, 2005, p.849).
Cash Flow
Lawrence Sports is in need of receiving payment from Mayo. Mayo is has internal issues and have not made payments to Lawrence Sports and is pressuring Mayo for payments.
Collection may be the option of receiving payments.
“Payments on accounts payable. The cash-flow forecast assumes all these bills are paid on time, although delay payment to some extent; stretching your payables” (Beraley, Myers, & Allen, 2005, p.850).
Payment Options
Lawrence Sports working capital reflects from the vendors and has made effect on the Lawrence current business and future business. The outstanding payments, and stretching payments will put Lawrence Sports into financial trouble if this continues.
Develop a policy that will keep the vendors how to maintain their accounts and reduce the risk of their business relationship.In good standards will keep a good working relationship between each vendor.
“We begin our discussion of working capital management by focusing on the four principal types of current asset. We look first at accounts receivable.Companies frequently sell goods on credit, so that it may be weeks or even months before the company is paid. These unpaid bills are shown in the accounts as receivables”