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Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
Managing cash flow, Slide Presentation
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Managing cash flow, Slide Presentation

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  • 1. MANAGING CASH FLOW Presentation on: Date: 19th September, 2013
  • 2. PREPARED BY: THE ALIENS
  • 3. What is a Cash flow management ? Forecasting, collecting, disbursing, investing, and planning for the cash. It is needed for a company to operate smoothly. It helps to evaluate whether a shortfall or surplus in cash could potentially occur.
  • 4. Cash Flow Cash Accounts Payable Decrease in Cash Production/Cash Purchases Inventory Accounts Receivable Cash Sales Increase in Cash Leakage Leakage
  • 5. A “cash map,” showing the amount and the timing of a firm's cash receipts and cash disbursements over time. Predicts the amount of cash a company will need to operate smoothly. A helpful tool for visualizing the resulting cash balance. The Cash Budget
  • 6. Five Steps of Preparing a Cash Budget  Determine a Minimum Cash Balance  Forecast Sales  Forecast Cash Receipts  Forecast Cash Disbursements  Estimate End-of-Month Cash Balance
  • 7. Determine a Minimum Cash Balance Determine the opening balances by obtaining latest bank balance, account receivable, and accounts payable balance, if the business is already in operation. If the business is new, show the current capital and the estimated capital can be gained from investors and lenders.
  • 8. Forecast Sales The heart of the cash budget. Sales are ultimately transformed into cash receipts and cash disbursements. Cash forecast is only as accurate as the sales forecast from which it is derived.
  • 9. Forecast Cash Receipts Address the timing of cash collection of sales. Record all cash receipts when actually received (i.e., the cash method of accounting). Determine the collection pattern for credit sales; then add cash sales. Monitor closely slow and nonpayers.
  • 10. Forecast Cash Disbursements Record disbursements when you expect to make them. Start with those disbursements that are fixed amounts due on certain dates. Review the business checkbook to ensure accurate estimates. Try making a daily list of the items that generate cash and those that consume it.
  • 11. Estimate End-of-Month Balance Take Beginning Cash Balance. Add Cash Receipts. Subtract Cash Disbursements Result can be Cash Surplus or Cash Shortage.
  • 12. The “Big Three” of Cash Flow Management Accounts Receivable Accounts Payable Inventory
  • 13. Accounts Receivable A sale is not a sale until you collect the money. The goal with accounts receivable is to collect your company’s cash as fast as you can. About 90 percent of industrial and wholesale sales are on credit, and 40 percent of retail sales are on account.
  • 14. Accelerating Accounts Receivable Ask customers to fax or e-mail orders. Send invoices when goods are shipped. Highlight the due date on invoices. Restrict customers’ credit until past-due bills are paid Deposit checks and credit card receipts daily.
  • 15. Accounts Payable Stretch out payment times as long as possible without damaging company’s credit rating. Verify all invoices before paying them. Take advantage of cash discounts. Negotiate the best possible terms with your suppliers. Use credit cards wisely.
  • 16. Inventory Monitor it closely; it can drain a company’s cash. Avoid inventory “overbuying.” It ties up valuable cash at a zero rate of return. Arrange for inventory deliveries at the latest possible date. Negotiate quantity discounts with suppliers when possible.
  • 17. Avoiding the Cash Crunch Consider bartering, exchanging goods and services for other goods and services, to conserve cash. Trim overhead costs. For example: Ask for discounts and “freebies” Periodically evaluate expenses. Lease rather than buy. Avoid nonessential cash outlays. Negotiate fixed loan payments to coincide with your company’s cash flow.
  • 18. Continued (Trim overhead costs) Buy used equipment. Hire part-time employees and freelancers. Control employee advances and loans. Establish an internal security and control system. Devise a method for fighting check fraud. Change shipping terms. Start selling gift cards. Switch to zero-based budgeting.
  • 19. Small Business Success No matter what the economic forecast, keeping company’s cash flowing can: Help the company to grow and expand. Keep vendors and employees paid and happy. Invest in new products or markets. Make the business a success.

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