This document discusses keys to successful cash flow management for businesses. It covers understanding cash flow and working capital, maximizing cash flow by managing accounts receivable and payable, and tips and tools for implementing a cash flow management strategy including depository and credit card services. The presentation aims to provide businesses with information and strategies for monitoring and improving cash flow through metrics like current ratio and inventory and receivables turnover. It also offers advice for managing cash flow crises by adjusting cash inflows and outflows.

1. Successful Cash Management
For Your Business!
Presented by
Strategic Growth Partners, LLC
For

2. Successful Cash Management
For Your Business!
Discussion Agenda
Understanding the Keys to good Cash
Flow Management
Maximizing Cash Flow in Your
Business
Tips and Tools in Implementing a
Cash Flow Management Strategy

3. Understanding the Keys to good
Cash Flow Management
Cash flow refers to the
movement of cash into or
out of a business.
Measured by cash receipts
less cash outlays
(expenses).
Accrual accounting different
from cash accounting
(accounts receivable,
accounts payable, etc.)

4. Understanding the Keys to good
Cash Flow Management
What is Working Capital?
Current Assets − Current Liabilities
Current Ratio is a metric that measures the amount of
current assets to current liabilities
Represents operating liquidity available to a business
Positive working capital is required to ensure that a
firm is able to continue its operations and satisfy
upcoming operational expenses and maturing short-
term debt.

5. Understanding the Keys to good
Cash Flow Management
What Affects Cash Flow and Working
Capital?
Accounts Receivable: When AR
increases, you are using cash; when
AR decreases you are producing cash
Inventory: When inventory
increases, you are using cash; when
inventory decreases you are producing
cash
Accounts Payable: When AP goes
up, you are producing cash; when AP
goes down, you are using cash.

6. Understanding the Keys to good
Cash Flow Management
The Cash Flow Statement – The Holy Grail to good cash
flow management
Basic elements of a cash flow statement
Starting Cash
Cash In-Flows:
Cash Sales
Collections on Accounts Receivable
Loan Proceeds
Cash Out-Flows:
Operating expenses paid
Payments to vendors (accounts payable)
Loan repayments (principal)
Ending Cash

7. Understanding the Keys to good Cash
Flow Management
Cash Flow Worksheet
Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Total
Beginning Cash Balance 50,000 $50,000 $50,000 $50,000 $50,000 $50,000
Cash Inflow (Incom
s e):
Accts. Rec. Collections 200,000 175,000 125,000 100,000 125,000 175,000 900,000
Loan Proceeds 32,800 42,800 20,550 175 96,325
Cash Sales 15,000 10,000 12,500 13,000 15,000 65,500
Other:
0
0
Total Cash Inflow s $215,000 $207,800 $177,800 $133,050 $138,175 $190,000 $1,061,825
Available Cash Balance $265,000 $257,800 $227,800 $183,050 $188,175 $240,000
Cash Outflow (Expenses):
s
A dvertising 5,000 5,000 5,000 5,000 5,000 5,000 30,000
Bank Service Charges 300 300 300 300 300 300 1,800
Credit Card Fees 2,500 2,000 2,000 2,250 2,375 2,500 13,625
H ealth Insurance 10,000 10,000 10,000 10,000 10,000 10,000 60,000
Insurance 5,000 5,000 5,000 5,000 5,000 5,000 30,000
Interest 2,500 2,500 2,500 2,500 2,500 2,500 15,000
Inventory Purchases 75,000 20,000 20,000 25,000 30,000 35,000 205,000
M iscellaneous 15,000 15,000 10,000 10,000 10,000 15,000 75,000
Payroll 40,000 40,000 40,000 40,000 40,000 40,000 240,000
Payroll Taxes 7,500 7,500 7,500 7,500 7,500 7,500 45,000
Professional Fees 5,000 5,000 5,000 5,000 5,000 5,000 30,000
Rent or Lease 15,000 15,000 15,000 15,000 15,000 15,000 90,000
Subscriptions & Dues 1,000 1,000 1,000 1,000 1,000 1,000 6,000
Supplies 2,000 2,000 2,000 2,000 2,000 2,000 12,000
Taxes & Licenses 1,000 1,000 1,000 1,000 1,000 1,000 6,000
U tilities & Telephone 1,500 1,500 1,500 1,500 1,500 1,500 9,000
Other:
0
0
0
Subtotal $188,300 $132,800 $127,800 $133,050 $138,175 $148,300 $868,425
Other Cash Out Flow s:
Capital Purchases 50,000 50,000
Loan Principal 26,700 25,000 41,700 93,400
Owner's Draw 50,000 50,000
Other:
0
Subtotal $26,700 $75,000 $50,000 $0 $0 $41,700 $193,400
Total Cash Outflow $215,000
s $207,800 $177,800 $133,050 $138,175 $190,000 $1,061,825
Ending Cash Balance $50,000 $50,000 $50,000 $50,000 $50,000 $50,000

8. Maximizing Cash Flow in Your
Business
Managing Accounts Receivable
Establishing credit policies and limits
Invoicing- timing and terms
Managing and monitoring your A/R
Open invoices reports
A/R turnover metrics
Collections
Write off’s

9. Maximizing Cash Flow in Your
Business
Managing Accounts Payable
Getting the terms you need
A/P turnover metrics
Taking discounts
Taking inventory on consignment
Managing inventory
Just in time practices
Inventory requires healthy working capital
Inventory on hand reports; inventory turnover metrics

10. Tips and Tools in Implementing a
Cash Flow Management Strategy
Depository Services
Depositing funds via the internet
Receiving payments via credit card and ACH
debit
On-line account services
Balance and account activity information
Bill payments, timing to coordinate with available
cash
Funds transfer between accounts (deposits and
loans)

11. Tips and Tools in Implementing a
Cash Flow Management Strategy
Credit Card Services
Using to pay bills and obtain benefits of float
Look for card associated benefits (i.e. reward
points, frequent flyer miles, etc.)
Manage use appropriately, paying off balance
monthly to avoid interest charges and late
fee’s

12. Tips for Managing a Cash Flow
Crisis
Prepare/update cash flow projection
Determine cash short fall (timing and extent)
Managing cash inflows:
Sell to clients who pay
Pre-bill/Job deposits
Invoice for work more frequently/Discounts for quick payments
Collect by credit card/ACH debits/remote deposit services
Managing cash outflows:
Extended terms with vendors
Pay vendors on agreed terms, not beforehand
Review all expense items
Outside sources of cash:
Banks, leasing resources, factoring
Federal, State & Local Government resources (direct loans, SBA,
economic development, etc.)
Personal and family resources (home equity loan, credit cards,
retirement accounts)

13. Successful Cash Management
For Your Business!
Questions?

14. Successful Cash Management
For Your Business!
Strategic Growth Partners is a joint venture
between Donohue-Hart & Associates and
Alliance Advisory Group.
It was formed to provide businesses with
access to professional and affordable
strategic planning and execution advisory
services.
The professionals that make up Strategic
Growth Partners have over one hundred
years of combined experience in owning,
operating and managing various business
enterprises.

15. Successful Cash Management
For Your Business!
To Contact Us for Further Information:
Randy Farnum
410-409-0286
randy@allianceadvisorygroup.net