Cash Flow - Ways Companies Can Augment Reported Cash Flow

Ways Companies Can Augment Reported Cash Flow

Common methods include:

  • Sales - Sell the receivables to a factor for instant cash. (leading)
  • Inventory - Don't pay your suppliers for an additional few weeks at period end. (lagging)
  • Sales Commissions - Management can form a separate (but unrelated) company and act as its agent. The book of business can then be purchased quarterly as an investment.
  • Wages - Remunerate with stock options.
  • Maintenance - Contract with the predecessor company that you prepay five years worth for them to continue doing the work
  • Equipment Leases - Buy it
  • Rent - Buy the property (sale and lease back, for example).
  • Oil Exploration costs - Replace reserves by buying another company's.
  • Research & Development - Wait for the product to be proven by a start-up lab; then buy the lab.
  • Consulting Fees - Pay in shares from treasury since usually to related parties
  • Interest - Issue convertible debt where the conversion rate changes with the unpaid interest.
  • Taxes - Buy shelf companies with TaxLossCarryForward's. Or gussy up the purchase by buying a lab or O&G explore co. with the same TLCF.

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