logging in or signing up Cash Flow Management TocaFamily Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 444 Category: Business & Fin.. License: All Rights Reserved Like it (0) Dislike it (0) Added: April 01, 2011 This Presentation is Public Favorites: 0 Presentation Description This Cash Flow Management presentation is a narrated overview of cash flow management and why and how to successfully manage your business cash flow. It includes a two-part example on cash flow - what happens when a company does not manage cash and flow and what occurs when a company does. Comments Posting comment... Premium member Presentation Transcript How to Manage Cash Flow: 1 How to Manage Cash Flow What is cash flow? How do you manage cash flow? Explanation and ExampleCash flow What is it? : 2 Cash flow What is it? Cash Flow = Incoming cash – outgoing cash = Cash receipts – cash payments What is cash? Actual, literal cash: cash, money orders, cashier’s checks , and checks NOT accounts receivables or invoicesCash Flow Management What is it?: 3 Cash Flow Management What is it? Ensuring cash inflows > cash outflows for any given time period Tracking, analyzing, and adjusting your company’s cash flows REMEMBER: You can have positive (+) net income and negative (-) cash flowExample Part I: 4 Example Part I Background / Assumptions Enter into $200,000 contract for 6 months Submit invoices at end of month. Client has 30 days to pay you. Primary costs – personnel costs and overhead allocation Prior year revenue of $1,000,000. So contract provides 20% of the previous year’s revenue. Your firm starts fulfilling the contract on February 1. On contract, will make gross profit of 60% and operating profit of 30%Example Part I (cont’d): 5 Example Part I (cont’d) Revenue Op. Income Cash Flow End of week 2 (day 15) $16,667 $5,000 -$6,667 End of week 4 (day 30) $33,333 $10,000 $-13,333 End of week 6 (day 45) $50,000 $15,000 -$20,000 End of week 8 (day 60) $66,666 $20,000 $6,667Cash Flow Improvements : 6 Cash Flow Improvements To improve cash flow, shorten the invoicing and A/R period, such as: Offer early payment discounts Structure contracts to say “payment upon receipt of invoice” or “net 15” Invoice on the 15 th and 30 th , for better timing Or obtain a deposit for services rendered or a partial payment in advanceExample Part II: 7 Example Part II Revenue Op. Income Cash Flow End of week 2 (day 15) $16,667 $5,000 $3,333 End of week 4 (day 30) $33,333 $10,000 -$3,333 End of week 6 (day 45) $50,000 $15,000 $6,667 End of week 8 (day 60) $66,666 $20,000 $16,667Summary: 8 Summary This (unplanned cash flow shortage) is how fast growing companies can go bankrupt. Companies book revenue at a rate multiples higher than the previous year but they have negative operational cash flow. These companies don’t have the financing/working capital to cover the gap in operational cash flow. You must engage in budget planning and analysis before EACH and every project in order to plan your cash needs.Getting Started: 9 Additional Information: Solving the Capital Equation: Financing Solutions for Small Businesses Available on Amazon Or get the ebook Help! I Need Money for My Business Now!! www.smallbusinessfinancingresource.com Getting StartedContact Us: 10 Thank You! Toca Family Business Services Follow my blog, Small Business Finance Forum: http://blog.smallbusinessgrowthcapital.com Tiffany C. Wright Contact Us You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.
Cash Flow Management TocaFamily Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 444 Category: Business & Fin.. License: All Rights Reserved Like it (0) Dislike it (0) Added: April 01, 2011 This Presentation is Public Favorites: 0 Presentation Description This Cash Flow Management presentation is a narrated overview of cash flow management and why and how to successfully manage your business cash flow. It includes a two-part example on cash flow - what happens when a company does not manage cash and flow and what occurs when a company does. Comments Posting comment... Premium member Presentation Transcript How to Manage Cash Flow: 1 How to Manage Cash Flow What is cash flow? How do you manage cash flow? Explanation and ExampleCash flow What is it? : 2 Cash flow What is it? Cash Flow = Incoming cash – outgoing cash = Cash receipts – cash payments What is cash? Actual, literal cash: cash, money orders, cashier’s checks , and checks NOT accounts receivables or invoicesCash Flow Management What is it?: 3 Cash Flow Management What is it? Ensuring cash inflows > cash outflows for any given time period Tracking, analyzing, and adjusting your company’s cash flows REMEMBER: You can have positive (+) net income and negative (-) cash flowExample Part I: 4 Example Part I Background / Assumptions Enter into $200,000 contract for 6 months Submit invoices at end of month. Client has 30 days to pay you. Primary costs – personnel costs and overhead allocation Prior year revenue of $1,000,000. So contract provides 20% of the previous year’s revenue. Your firm starts fulfilling the contract on February 1. On contract, will make gross profit of 60% and operating profit of 30%Example Part I (cont’d): 5 Example Part I (cont’d) Revenue Op. Income Cash Flow End of week 2 (day 15) $16,667 $5,000 -$6,667 End of week 4 (day 30) $33,333 $10,000 $-13,333 End of week 6 (day 45) $50,000 $15,000 -$20,000 End of week 8 (day 60) $66,666 $20,000 $6,667Cash Flow Improvements : 6 Cash Flow Improvements To improve cash flow, shorten the invoicing and A/R period, such as: Offer early payment discounts Structure contracts to say “payment upon receipt of invoice” or “net 15” Invoice on the 15 th and 30 th , for better timing Or obtain a deposit for services rendered or a partial payment in advanceExample Part II: 7 Example Part II Revenue Op. Income Cash Flow End of week 2 (day 15) $16,667 $5,000 $3,333 End of week 4 (day 30) $33,333 $10,000 -$3,333 End of week 6 (day 45) $50,000 $15,000 $6,667 End of week 8 (day 60) $66,666 $20,000 $16,667Summary: 8 Summary This (unplanned cash flow shortage) is how fast growing companies can go bankrupt. Companies book revenue at a rate multiples higher than the previous year but they have negative operational cash flow. These companies don’t have the financing/working capital to cover the gap in operational cash flow. You must engage in budget planning and analysis before EACH and every project in order to plan your cash needs.Getting Started: 9 Additional Information: Solving the Capital Equation: Financing Solutions for Small Businesses Available on Amazon Or get the ebook Help! I Need Money for My Business Now!! www.smallbusinessfinancingresource.com Getting StartedContact Us: 10 Thank You! Toca Family Business Services Follow my blog, Small Business Finance Forum: http://blog.smallbusinessgrowthcapital.com Tiffany C. Wright Contact Us