Working Capital Management

After careful analysis, the following is a recommendation on how we can improve our working capital management processes. Please review and I will organize a meeting early next week to discuss in further detail.

Issue 1: Improving Cash Flow

It is my recommendation that we focus on improving our relationships with our partners Mayo Stores, Gartner Products and Murray Leather Works. The goal of our firm is to ensure we are able to continue operations and have sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses. In order to accomplish this, I would advise we use the float cash flow method. The float method would improve our cash flow model because we would have a better way of dealing with sunk costs, future investments, acquisitions, reorganization, etc.

Issue 2: Business Relationships with Suppliers and Vendor

In the face of our need to improve cash flow and hold down bank borrowing, we still need to maintain a good relationship with our business partners. There have been many uncertainties recently with the payment schedules. We can improve in this area by renegotiating the terms of these schedules. We must also improve our inventory management processes as well as introduce the above mentioned float method.

Issue 3: Ethical Issues

Finally, we have had a long-term, successful relationship with Murray Leather Works and they are very dependent on our business. We do not want to risk putting them out of business but must first do was it best for our company. With the recommendations stated we should be able to make more timely payments to Murray Leather Works, which would avoid our having an adverse consequence to their business. The ultimate