Cash-flow forecasting and working capital — practice question

C&P Designs is a partnership business run by Cory and Phoebe. They produce handmade jewellery. Phoebe works at home making all the jewellery, including necklaces and bracelets. C&P pay for materials when they are ordered, but they let customers take one month to settle payment. Cory looks after the accounts and the shop. He is concerned about cash flow, as Table 2 shows. Cory said: ‘The bank will not increase our overdraft. We should ask customers to pay more quickly.’ Phoebe believes advertising would raise sales, but she is worried about legal controls.