PowerPoint PresentationVice-Chancellor Designate Tangaza University
College
Objectives:
Appreciate the role of Cash Management in your business
operations.
Draw the relationship between profitability and management of Cash
flow
Combine the short term asset decision with the short term
financing.
Learn about the Cash Cycle: Gain an overview of what factors/areas
are inputs to a working capital and how they affect the cash
balance
Know the risks involved and how to manage them
Cash flow management is a problem for almost any firm, large or
small.
The worst symptom of the problem: the business runs out of
cash.
Watching a business struggling, running out of cash even as it
makes great sales and profits is painful.
Painful though it may be, it is common and repeatedly the cause of
business failure.
Why is cash flow important? Cash is the lifeblood of a
business
Cash flow is the cycle of cash inflows and cash outflows that
determine your business' solvency
Profit does not equal cash flow – cash, not profit, is required to
pay off suppliers and creditors
Having a healthy cash reserve provides a buffer against unexpected
competition or interruptions to the business
Tips for Cash flow management Start with self discipline in
personal financial management
Pay yourself a regular salary
Forecast your cash flows and stick to it
Know your expenses and incomes (accounting system) and control
them
Know your Customers/Debtors and collect on time
Have good controls on cash handling
Have a good relationship with your bank
The Owner Manager
Database Management Information System Accounting System
Borrowing Owner Capital
Cost of Borrowing
etc.
8
Cash
Management
Firm's
(1)
(2)
(3)
Reasons Often Given to Avoid Writing a Budget
I don’t need one. I have one in my head.
I don’t know how to begin. I don’t have enough time. I’m not a
numbers person.
Lots of famous entrepreneurs didn’t write one. I make more than
enough money and am beautiful,
rich and immortal.
Benefits of Budgeting
helps managers evaluate performance
motivates employees to achieve company goals
Financial Planning 10 Must Answer Questions How much cash will we
really need? What do the next year financials look like? What’s the
path to profitability? What are the risks and rewards? How can
these be managed successfully? How large is the addressable market?
How fast is the market growing? Who’s the management team? What is
the value of my company? What is the exit strategy?
CASH FLOW BUDGET Jan … Dec Total
CASH INFLOWS (receipts) 1. Operating income 2. Capital sales 3.
Other receipts
CASH OUTFLOWS (expenditures) 1. Operating expenses 2. Capital
purchases 3. Other expenditures
FINANCIAL SUMMARY 1. Money to borrow 2. Loan payments 3. Loan
balances
13
Jan Feb March April May June July August Sept Oct Nov Dec Total
Cash bal B/F 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Cash Inflows Debtors Collections 0.00 Loan Proceeds 0.00 Sales
& Receipts 0.00 Other: 0.00 Total Cash Inflows 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Advertising 0.00 Bank Charges 0.00 Creditors Payments 0.00
Insurance 0.00 Interest 0.00 Inventory Purchases 0.00 Office 0.00
Salaries & Wages 0.00 Professional Fees 0.00 Rent or Lease 0.00
Taxes & Licenses 0.00 Utilities & Telephone 0.00 Other:
0.00 Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 Capital Purchases 0.00 Loan Principal 0.00 Owner's
Drawings 0.00 Other: 0.00 Subtotal 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Cash Outflow 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Mafuta Tamu Business Cashflow Projection 2020
Sheet1
Materials Payment for
Days’ Inventory
Managing your debtors
Objectives: Creating, preserving, and collecting debtors.
Establishing and communicating credit policies. Evaluation of
customers and setting credit lines. Ensuring prompt and accurate
billing. Maintaining up-to-date records of accounts receivables.
Initiating collection procedures on overdue accounts.
10 things you can do to increase your cash flow: 1. Organize your
billing ( debtors) schedule and
enhance debt collection 2. Stretch out your payables 3. Take
advantage of early payment incentives 4. Balance your client base
5. Check your pricing 6. Don't buy all in one place ( Always look
out) 7. Form a buying cooperative ( can you) 8. Renegotiate your
supplier policies 9. Tighten your inventory 10. Consider leasing
/Asset financing
Cash Flow Punch List • Prepare monthly financial statements.
– Compare with prior periods. • Frequently update your projections
and cash flow plan. • Keep track of key income statement
percentages. • Maintain good internal controls to prevent
dishonesty and shrinkage. • Careful on the authority to sign checks
or purchase orders. • Don't use money that you have withheld for
PAYE taxes or sales
taxes (VAT or Turnover Tax) for other purposes. • Liquidity is not
the same as making money.
– You can be making a profit and still go broke by running out of
cash. Learn and practice cash flow control.
• Arrange for financing well before the need arises.
Conclusion
Cash Flow management is the single most important function for
financial freedom in your business.
C = Cash available to run your business A = Access to accurate
information for quality decision making S = Sensitivity towards the
effects of expenses and incomes H = Help to discipline all who
affect income and expenses F = Future Planning for prosperous
business L = Lower risk of financial disarray by budgeting O = Open
the door to financial independence W = Wealth creation and
protection.
CASE STUDY
Petrobas Case-Study Case Preparation Questions
What strategy did Petrobas use? Was it good? ¬ What financial
position is Petrobas facing? How did he get there? If you are Mussa
how would you deal with the situation?
Engage us:
[email protected] @TangazaUniversityCollege
TANGAZA UNIVERSITY COLLEGE A Constituent College of The University
of Eastern Africa
Teaching Minds, Touching Hearts, Transforming Lives
Presenter
Presentation Notes
How to engage us: - You may conveniently engage us by applying for
a program through our website or raise an enquiry on phone, email,
Facebook, Twitter, instagram or visit us in Tangaza University
College.
Academic Programs in Tangaza University College
Theology
Management
Presentation Notes
-We are running 8 masters programs among the 54 academic programs.
-Two that have supported businesses and governance world-wide are
Master of Arts in Social Transformation and MBA in Global Business
& Social Entrepreneurship. Our MBA units and activities are
selected to ensure entrepreneurs develop skills in innovation,
management, strategy, sales, marketing and emerging business
trends. Our MA in Social Transformation is designed to enhance your
skills in organizational management, sustainable development and
governance. This is delivered in a way that caters for the working
class and engages their enterprises. We are proud of our current
and alumni students some of whom are serving as Parliamentarians,
business managers, church leaders and government officers.
Contact Details
Tangaza University College Cell: +254722685762
Email:
[email protected]
Slide Number 7
Reasons Often Given to Avoid Writing a Budget
Benefits of Budgeting
CASH FLOW BUDGET
Slide Number 13
Slide Number 14
Managing your debtors
10 things you can do to increase your cash flow:
Slide Number 18