Enhancing Cash Flows

A company that operates where I live

There's a branded coffee company Nespresso (https://www.nespresso.com/tw/en/) who selling espresso machines and coffee capsules in Taiwan. 

How does the company enhance its cash flows? 

To enhance cash flows, the company has inflow and outflow solutions. And there are also internal and external solutions.

Internal Solutions

Inflow Solution/Crowded

They open their stores at crowded places to enhance the sales since crowded streets relative to higher possibilities of product views. Higher sales mean higher inflows of cash.

Inflow Solution/Accelerate Cash Collections

No matter how excellent your products are, you still need a great checkout system to ensure your customers can easily pay for your products. Mobile payments such as Apple Pay, LINE Pay, or credit cards, debit cards, are increasing recently. If their stores only accept cash, their sales will drop down for sure. Prices of their espresso machines are not that cheap and It's not the amounts of money for everyone would like to carry. Credit cards also induce people to purchase more since it's not an immediate outflow from their pockets. Once the customers feel less pain on their purchases, they would like to buy more than expected.

Inflow Solution/Discounts

Are you experienced a buy one, get one free promotion? Or the second one is 40% off? These kinds of promotions induce your heart to think it's cheaper if you purchase more, and the company gets higher inflows of cash from sales. Festivals such as New Year, Christmas, or Thanksgiving, and Valentine's Day, are all opportunities to announce some activities or discounts. 

Outflow Solution/Controls

The future agreement is the solution for possible price changes in coffee supply, to reduce the fluctuations of their cash outflows, and a long-term supply contract might also get better prices. Moreover, their expenses are outflow "on time", the electronic system is scheduled to pay for checks. In order to take better control of there cash flows internally, there are sensors and cameras around their store, also a passcard is needed for accessing the register. From the beginning, they even have to detect the counterfeit money by using a detector of counterfeit money. 

Does it contact outside parties to obtain investment funds by issuing stock, bonds, or borrowing in another way?

Nespresso Coffee Stores is a brand of the Nestlé Group. The Nestlé Group issues billions of shares of stock to obtain more operating funds from investors around the globe. Although this solution dilutes the ownership of original owners, it still a necessary step for such a big international company. Your shares can be much worthy if they use the funds effectively.

Instead of issuing stock, Nestlé sold some departments of their company. For instance, their famous brands like Haagen-Daze, Dreyer's and Drumstick are sold to Froneri company for cash. 

Reference

Chapter 6: Cash and Highly-Liquid Investments. (n.d.). Retrieved from 

https://www.principlesofaccounting.com/chapter-6/

Nestlé. (2020, March 1). Retrieved from https://en.wikipedia.org/wiki/Nestlé