Cash Flow Analysis in Strategic Human Resources Management The critical relationship between strategic human resources planning, project life cycle, and financial measurements. The Rapid Learning Institute
How to build a cash flow for strategic human resources planning
Think in terms of when your company gets cash in and when do we have to pay the cash out.
That’s how you begin to build the cash flow statement in your strategic human resources planning process
It’s a key decision criteria in strategic human resources planning and allocation
When calculating ROI, we're trying to say, “Fund my project. My project is the one that will provide the greatest benefits to company.”
When calculating the cash flow, we’re saying, “This is when we will see the cash from the project.”
Keep in mind only cash can be spent. Profits are important - look at the actual cash flow when making the decision.
CASH FLOW IS THE CASH YOU HAVE TODAY
The Rapid Learning Institute
A cash flow to profit comparison in strategic human resources planning
Here is an income statement for a company at the end of December. They have revenues of $150,000. They had expenses-materials and salaries of $120,000. They show a profit of $30,000. From a cash flow standpoint, they haven't actually been paid for the $150,000 worth of sales. So, they extended credit terms.
They had to pay for their raw materials. They had to pay their employees. There was a cash outflow for the total amount of the expenses of $120,000, which means from a cash flow standpoint, they're short by $120,000.
In 30 or 60 or 90 days from now when that cash comes in, that will balance out. But it's important to keep in mind that cash and profit are different. And we're going to be looking specifically at cash flow.