Manufacturer of heavy grade fabric uniforms for use in fire service, law enforcement, and extensive military applications. TCC sells primarily on account to their governmental clients who have varied payment histories. Some smaller agencies pay quite quickly while the larger ones may take four to six months to pay TCC. This differentiation in payment history is not believed to be due to product pricing as TCC hasn't increased the price of their garments since 2001 even though many of their raw materials have increased substantially in the last five years.
The company has a workforce of nearly 1,300 manufacturing personnel at three facilities in Alabama, Kentucky, and Georgia. Some of these full-time employees have been idle with the downward trend in orders from fire and police units in the last year. The Kentucky plant, formerly one of their largest producers, has seen a major decrease in activity as much of their equipment had been used to make the traditional BDU uniforms and is therefore now not nearly as active as it once was. TCC's version of the "digital" BDU's are being made in Alabama since that location already had equipment available that could handle the new patterns.
Since the economic instability of 2008 TCC has shown meager, but decreasing, profits each year and the overall net cash flows as found in the Statement of Cash Flows has been decreasing each year as well. The projected net cash outflow from all activities for next year is projected to be <$2,365,600> indicating that they will actually have to use reserve cash to makeup a projected shortfall. This is the first time they have had a serious net cash flow issue since their beginning in 1994.
As an employee of Cash Flow Consultants (an outside consulting firm) what suggestions/recommendations would you make to address their situation of decreasing, and potentially future negative cash flows? Your response of 500-600 words should CLEARLY identify multiple realistic suggestions addressing each of the three sections of the Statement of Cash Flows.