Lunchbox Learning - Get Financially Fit: Cash Flow
Lunchbox Learning Workshop Financially Fit SeriesCash-Flow for Management December 2012
DMGNZ Our MissionTo Support New Zealand Businesses to Develop, Manage and Grow. We specialise in…Working as an Extension of our Clients Team!!!
DMGNZWe started as an Outsourced Credit Control CompanyNow offer a full range of back office services:• Debtor Management• Book-keeping• Payroll Services• Business Support• Strategic Services• Training
Nicky @ DMGNZBeen in business for 12+ years.• I am not an Accountant. – Work with Accountants.• A QBE – Qualified by Experience• Take a Holistic Approach.• Problem Solver.• I Love Training!!!
Financial Fitness for 2013There are 6 areas I feel are essential to healthy financial fitness within a business:• Debtor Management Processes.• Creditor Management Processes.• Budgeting Systems.• Monthly Reporting.• Cash-Flow Management.• Working with your Accountant and Bank Manager.
Debtor Management Systems• Implementing systems for before you give credit – Account opening forms – Credit checks – Setting the parameters for the ongoing relationship• Following through when making the sale – Sending invoices & statements – PPSR registrations for goods valued over $2000• Robust Credit Control System – Reconcile bank account daily – Make the phone call – Follow through on promises …
Creditor Management Systems• Keep records of all transactions: – Receipts. – Invoices. – Bank statements.• Reconcile supplier statements & invoices.• Keep all records in a logical order: – So it works for you!• Use one system to collate all information: – Eg: MYOB, Xero, Cash book…• Communicate with suppliers where necessary.
Budgeting Systems• Your budget is your financial plan for the year ahead!• Align it with your IRD financial year/end of year accounts.• Be realistic…• Review it regularly• Adjust for changes in your trading needs.
Monthly ReportingSet up regular monthly reporting to analysis your businesses performance…• Minimum Reports – Profit and Loss – Aged Receivables & Payables – Budget vs Actual Analysis• Additional Recommendations – Balance Sheet – Item Transactions – Client Transactions• Accounting Ratios – Current Ratio – Quick Asset Ratio – Gross &/or Net Profit to Sales Ratio – Return on Owner’s Equity – Stock Turnover – Average Debtor &/or Creditor Days
Cash-Flow Management!!! Cash Flow is King!How often do you manage your cash flow…• Monthly?• Daily?• As Required?• Never????
Cash-Flow Management!!!4 Step Process:• Monthly Cash-flow Forecast.• Create a Template for the Daily Cash-flow.• Up-date Daily.• Analysis and Adjust.
Monthly Cash-Flow Forecast• Good overview for Cash flow management.• Process undertaken in conjunction with your budgeting process.• Shows Cash Flow tight spots throughout the year.Note:• Be realistic – This is a planning tool for you!• Cash flow figures always include GST.• Allow for Tax – GST, Income, Provisional…• Include opening and closing bank balances.
Monthly Cash-Flow ForecastsResources• http://www.bnz.co.nz/business-banking/business-help-and-info/artic• https://bizhub.anz.co.nz/tools-and-calculators.aspx• http://www.business.govt.nz/support-and-advice/advice-mentoring/f• Your Accountant• Your Book-keeper• Your Mentor• Google
Daily Cash-Flow ForecastSetting up a Forecast template:• Start with setting up a template with the month broken down.• Put in the appropriate days and dates.• Plan out your expected dates for expenditure – Wages – Creditor Payments – Debtor Payments – Tax Obligations• Debt breakdowns – Payment Plans
Daily Cash-Flow Layout Start with setting up a template with the month broken down. Cash Flow Template Overdraft Limit as at ?? $0.00 NotDay Date Details Method Freq Paid Outgoing Incoming Balance Notes: Available Funds MONTH Opening Balance 5,000.00 5,000.00 1st 5,000.00 5,000.00
Daily Cash-Flow Layout 6th Telecom DD M 500.00 4,500.00 4,500.00 7th Wages W 3000.00 1,500.00 1,500.00 Drawings 1000.00 500.00 500.00 Estimated Amount and Fixed Date Fixed Amount and Date Expected Amount and DateNote: Highlight regular payments to make sure they are not forgotten - this will bring them to your attention
Daily Cash-Flow LayoutLong Term Debt – Payment PlansPayment Plan due EOM Monthly Original Start Date M Total Paid Owing Notes Amount amount Start Date Creditor One 100 BP 5,000.00 5,000.00 0.00 Finished Nov 2012 Creditor Two 200 BP 10,000.00 4,750.00 5,250.00 Creditor Three 300 AP 150,000.00 29,400.00 120,600.00 Westpac CC - Incl Dec-12 240 BP 480.00 480.00 Int Westpac CC - Incl Feb-13 480 BP 4,542.16 4,542.16 Int
Daily Cash-Flow LayoutMultiply Bank Accounts• These can be combined as one or separated out. – Recommend separate sheets per bank account. – Personal choice.• Multiply companies need to be on separated forecasts.
Daily Cash-Flow Management Updating process: • Reconcile your bank statement. • Up date your cash flow document. – Reduce Debtors due as payments are received. – Reduce the Creditors due as payments are made &/or list individually. • Show the date balanced to. “Daily updating creates a Proactive Decision making process”
Using you Cash-FlowStatement for ManagementLets Analysis our statement:• Where account becomes overdrawn!• What figures are still estimates?• What cash movement can be changed?• Where might you need to talk to your bank manager?• What Debtors do you need to talk with?• What Creditors do you need to talk with?
Next Step 6 Month Financially Fitness ProgramCovers all area’s outlined today.1 day group workshop.5 x one to one 2 hour coaching sessions.Next workshop in New Year
Early Bird Special 6 Month Financially Fitness Program Book your space by 20th December 2012 Get 50% off the course cost.Note:Course invoice must be paid in full by 15th January 2013.Payment plans available, these incur an admin cost.