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Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
Tips for Improving Cash Flow from Deloitt
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Tips for Improving Cash Flow from Deloitt

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This presentation offers valuable tips for business owners and financial executives to better manage your company\'s assets and raise capital in a changing economy. You\'ll learn new strategies for …

This presentation offers valuable tips for business owners and financial executives to better manage your company\'s assets and raise capital in a changing economy. You\'ll learn new strategies for conserving cash, diversifying funding sources, and retaining talent -- all from a new Deloitte special report. Find out how to develop a "new mix" of capital to finance your company, and hear other tips for reducing costs and accelerating business growth.

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  • 1. Tips for Improving Cash Flow from Deloitte
    May 19, 2011
    2:00 p.m. ET / 11:00 a.m. PT
  • 2. 1
    Today’s Agenda
    • Introduction
    • 3. Tips from Deloitte: Ways CFOs can adapt to changing financial markets1
    • 4. Receivables Auction: An innovative solution to raise capital
    • 5. Q & A
    Source: Deloitte & Touche LLP, “See the Bigger Picture: Managing Assets in Volatile Times: 9 ways CFOs can Adapt to Changing Financial Markets”..
  • 6. 2
    Tip 1: Diversify Capital Sources
    Credit is Scarce –“Plan for deeper relationships with a wider variety of credit providers and banks…and develop a better understanding of the risk exposure those entities may be facing themselves.”
    • Quality of cash flow and quality of earnings ranked as the top two reasons for declining these loan applicants
    • 7. Bank lending fell by $587 billion, or 7.5% in 2009, the largest annual decline since the 1940s
    Source: Federal Deposit Insurance Corp., 2010
    Source: Pepperdine Private Capital Markets Project, Survey Report III, 2010
    Source: CFO Magazine: July/August 2010
  • 8. 3
    Tip 2: Conserve Cash, Control Costs
    “Everybody’s looking for the quick, easy wins – but many companies will also need to implement more comprehensive, far-reaching cost reduction efforts to get the results they’re looking for.”
    What happens when there’s nothing left to squeeze?
  • 9. 4
    Tip 3: Lower Working Capital Requirements
    Track accounts payable performance by commodity and extend terms to industry benchmarks.
    Eliminate errors in the order-to-delivery process to reduce disputes and improve accounts receivable performance.
    Improve demand forecasting and inventory planning to lower inventory requirements.
  • 10. 5
    Tip 4: Establish a Plan C
    Traditional budgeting cycles are no longer applicable or particularly useful. Focused, short-term 30 and 60-day forecasts may provide a much more practical option
    Economic and business uncertainty is forcing companies to improve cash flow visibility by driving greater use of short-term cash flow forecasting
  • 11. 6
    Tip 5: Seek Out Strategic Assets
    “If your company has the financing and cash on hand to support it,
    start looking for strategic assets today, and be prepared
    to move quickly but carefully.”
    What could your company do with more capital?
    • Expand through real estate
    • 12. Invest in technology
    • 13. Hire more staff
    • 14. Increase market share through acquisitions
    • 15. 60% of companies anticipate their working capital needs to increase in 2011 vs. 2010
    Source: The Receivables Exchange Working Capital Research Group. 2010
    If your company is strapped for cash, are you missing out on these opportunities?
  • 16. 7
    Tip 6: Communicate Effectively
    “It’s important to stay in constant communication with your most important stakeholders, with a strong focus on those closely involved in finance.”
    When it comes to transparency and communication the following groups are critical resources for any company:
  • 8
    Tip 7: Importance of Establishing a New Capital Mix
    “In the long term, CFOs will likely need to develop a new mix of capital to finance their companies.”
    Receivables finance
    Bank loans
    Asset-based loans
    Private equity
    Diversifying funding sources means lower risk and often times lower cost.
  • 21. 9
    Introducing The Receivables Exchange
    A Revolutionary Capital Market for B2B Finance
    The Receivables Exchange is an online electronic marketplace where small and midsize businesses sell their commercial receivables to qualified institutional investors and get less restricted access to competitively-priced capital.
    Companies auction their accounts receivable for sale
    • Over 60% of working capital is tied up in A/R – their largest use of capital
    • 22. DSO’s reduced (on average) from 59 days to 2 days
    Invoices for auction are purchased by Institutional Investors
    • Including banks, hedge funds and asset-based lenders
    • 23. Competitive, transparent and secure online auction drives down cost of capital
    Effectively manage working capital
    • Online monetization of A/R in a transparent and highly efficient marketplace provides flexibility and control
    An auction where everyone wins
  • 24. 10
    Sellers Maintain Complete Control
    Benefits of Exchange Traded A/R
    • No personal guarantees
    • 25. No contracts or blanket liens
    • 26. No monthly minimums or obligation to trade
    • 27. No hidden costs
    • 28. No customer notification
    • 29. Supplement existing financing or use as primary source
    You Set Parameters
    • Maximum discount fee paid
    • 30. Minimum advance amount
    • 31. When the auction closes
    • 32. Buyout Option – Optimal Criteria
    • 33. When to auction invoices
    • 34. Which invoices to auction
    A/R
    Seller
    A/R
    Buyer
    bids that fall outside of parameters are invalid
  • 35. 11
    No Personal Guarantees
    A personal guarantee on a business loan should be a last resort – Dun & Bradstreet
    Definition:“A personal guarantee is an unsecured promise from an individual to make loan payments when a small business is not able to do so.” – Inc. Magazine
    Which means…If you can’t pay your loan from your business account, you will have to pay from your personal account, and you could risk losing your car, yourhouse, and your savings.
    Receivables financing does NOT require a personal guarantee. You are leveraging your commercial receivables, NOT your personal assets.
  • 36. 12
    An Efficient Marketplace for Working Capital
    Existing Capital Marketplace
    New Competitive Electronic Capital Marketplace
    Banks
    Seller
    Seller
    Banks
    Asset Based
    Lenders
    Seller
    Seller
    Asset Based
    Lenders
    Traditional
    Factors
    Seller
    Seller
    Traditional
    Factors
    Hedge Funds
    Seller
    Seller
    Hedge Funds
    Pricing discrepancies
    Inefficient
    Local
    Fragmented
    Centralized
    Transparent
    Efficient
    Global
  • 37. 13
    … Saving You Money
    • More bargaining power if you aren’t relying on one funding source
    • 38. Online receivables financing unlocks the power of competition to lower your cost of capital.
    • 39. Lowering risk through diversification mean less opportunity to lose money over some unforeseen event – like your bank shutting down
  • 14
    Real World Case Study
    Company Overview & Challenge
    • 9 years in Biz
    • 40. Industry – engineering services personnel
    • 41. Long bank relationship
    • 42. Insufficient capital to fund growth opportunities
    The Solution & Results
    • Seller on The Receivables Exchange since 2009
    • 43. Grew by 37% in 2009, nearly 70% in 2010
    • 44. Lowered cost of capital more than 40%
    • 45. Spends 30 minutes per auction to manage cash flow
  • 15
    How The Receivables Exchange Works
    40thDay
    11:07am
    Auction Receivables on Your Own Terms to Drive Growth
    Submit Bid
    (Buyer 2)
    Advance: 90,000
    30 Day Disc Fee $1,2002
    Win Auction (Buyer 2)
    Advance: $90,000
    30 Day Disc Fee: $1,200
    Submit Bid
    (Buyer 1)
    Advance: 88,000
    30 Day Disc Fee $1,500
    6
    Invoice Pays
    $100,000
    TRE Remits
    Receivables Buyer $91,6004
    3
    Tuesday
    1:30pm
    4
    2
    Tuesday
    5:00pm
    Wednesday
    3:00pm3
    7
    Monday
    9:30am
    41stDay
    12:07pm
    1
    Thursday
    10:00am
    TRE Remits
    Seller: $8,400
    Post Auction
    Invoice: $100,000
    Min Advance: $85,000
    Max 30 Day Disc Fee: $1,5001
    5
    Advance Funds
    $90,000
    (Less TRE fees)
    1- All Auctions priced on 30 day basis
    2- Daily rate = $1200 / 30 days = $40
    3 - All auctions close 3.00pm Eastern
    4- Actual Fee = $40 * 40 days = $1600
  • 46. 16
    Industry Recognition
    “Most Innovative E-Commerce Company in the World”
    Named the winner in the e-commerce category of The Wall Street Journal’s 2010 Technology Innovation awards, which recognizes the most important innovators in technology worldwide. The first winner in the e-commerce category since 2004.
    “Top 40 Innovator in Financial Technology”
    Named to “2010 Tech 40: The Top 40 Innovators in Financial Technology” alongside financial services heavyweights JP Morgan Chase, Bank of America, Bloomberg and others.
    “New Capital Market”
    Morgan Stanley Business-to-Business finance report hails The Receivables Exchange as “a new capital market” and solution for SME supplier financing .
    “Hope for the Financial Industry”
    Named one of “Eight Startups Brimming with Hope for the Financial Industry.”
    “Best Web-based Supply Chain Financing Solution”
    Named the “2009 Best Web-based Supply Chain Financing Solution.”
  • 47. 17
    The Receivables Exchange – Structure and Eligibility
    • Eligibility Requirements for Seller Members
    • 48. Companies registered in the U.S.
    • 49. Two years minimum operating history
    • 50. Minimum $2 Million in annual revenue
    For additional information on how alternative financing can work for your business:
    • www.receivablesXchange.com
    • 51. working capital specialist call 877.392.4952
  • Q&A
    D. Ryan Campbell
    VP, Head of SMB Sales
    The Receivables Exchange
    rcampbell@receivablesxchange.com

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