1 / 10

Managing Cash: A Startup’s First Financial Priority

Managing Cash: A Startup’s First Financial Priority. “cash and no profits is better than profits and no cash”. Financial Reporting vs. Managerial Accounting. CFO. Treasurer. Controller. Planning & Budgeting. Credit Inventory Investments External reporting. Accounting Cost Audit

betty_james
Télécharger la présentation

Managing Cash: A Startup’s First Financial Priority

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Managing Cash:A Startup’s First Financial Priority “cash and no profits is better than profits and no cash”

  2. Financial Reporting vs. Managerial Accounting CFO Treasurer Controller Planning & Budgeting • Credit • Inventory • Investments • External reporting • Accounting • Cost • Audit • Internal reporting DKH Enterprises, Inc. Business Advisors

  3. Cash Management • Determine working capital needs • Sources of cash and policies/timing of receipts • Uses of cash: • Inventory conversion cycle – time cash tied up/supplier terms • Selling and marketing costs • Overhead costs • Timing/policies for cash payments • Develop a Cash Budget • Accelerate cash conversion process DKH Enterprises, Inc. Business Advisors

  4. Developing a Cash Budget • Determine the way in which cash flows through the business • Build a model that incorporates realistic assumptions about how your business really works • Track actuals to budget frequently in order to respond in an effective timeframe • Build flexibility to adjust assumptions as business experience changes DKH Enterprises, Inc. Business Advisors

  5. Sources & Uses of Cash • Sources of Cash; • Cash from Sales • Cash from Debt or Equity • Cash from Investments • Uses of Cash: • Buy and convert raw materials • Sell products • Pay bills for overhead • Long-term: pay off debt; expand (new products); contingencies DKH Enterprises, Inc. Business Advisors

  6. Cash from Sales • % accounts receivable (AR) paid in cash (credit cards, wire transfers, etc.) • Credit terms • % AR paid in 15, 30, 45, 60 days and so on • Isolate large account experience • % bad debt DKH Enterprises, Inc. Business Advisors

  7. Cash Needed for Operations • Cost of goods • Supplier payment terms • Conversion costs: • Labor • Co-packer • Shipping • Warehousing • Cycle time • Selling costs • Travel • Trade events • Sales materials • Promotions and programs • G& A Expenses • Payroll • Rent/Utilities • Pay off Debt • Invest in product development DKH Enterprises, Inc. Business Advisors

  8. Increase Cash Flow • Speed Collections • Invoice ASAP • Offer incentives for early pay/prepay • Accept credit cards • Deposit checks, then enter • Inventory and PO financing • Reduce Order Quantities/Cycle Time • Supplier lead-times • Transit times • Reduce finished goods inventory • Slow Payments • Negotiate supplier terms • Use credit cards or other credit facility DKH Enterprises, Inc. Business Advisors

  9. Cash Conversion Cycle • Inventory conversion • Days sales outstanding • Payables deferral • Cash conversion cycle: days to convert raw materials and to receive cash from customers DKH Enterprises, Inc. Business Advisors

  10. Cash Conversion Measure • Inventory conversion = Inventory/Sales per Day • Days sales outstanding = Accounts receivable/ • Sales per day • Payables deferral = Accounts Payable/ • Cost of Goods Sold/365 Cash conversion cycle = (1+2)-3 DKH Enterprises, Inc. Business Advisors

More Related