COURSE OVERVIEW:
There's an old adage about business that "cash is king" and, if that's so, then cash flow is the blood that keeps the heart of the kingdom pumping.
Cash flow is one of the most critical components of success for a small or mid-sized business. Without cash, profits are meaningless. Many profitable businesses on paper has ended up in bankruptcy because the amount of cash coming in doesn't compare with the amount of cash going out. Firms that don't exercise good cash management may not be able to make the investments needed to compete, or they may have to pay more to borrow money to function.
Despite the fact that cash is the lifeblood of a business - the fuel that keeps the engine running - most business owners don't truly have a handle on their cash flow. Poor cash-flow management is causing more business failures today than ever before.
There are many areas in a business that can impact on cash flow. It is important to understand how customer payment terms, supplier payment terms, loan payments, future spending decisions and other items can affect the cash flow.
What is cash flow? It's basically the movement of funds in and out of your business. You should be tracking this either weekly, monthly or quarterly. There are essentially two kinds of cash flows:
- Positive cash flow: This occurs when the cash funnelling into your business from sales, accounts receivable, etc. is more than the amount of the cash leaving your businesses through accounts payable, monthly expenses, salaries, etc.
- Negative cash flow: This occurs when your outflow of cash is greater than your incoming cash. This generally spells trouble for a business, but there are steps you can take to remedy the situation and generate or collect more cash while maintaining or cutting expenses.
Achieving a positive cash flow does not come by chance. You have to work at it. You need to analyse and manage your cash flow to more effectively control the inflow and outflow of cash.
This course explains the issues involved in managing cash and the difference between profit and cash, clearly and simply. It is an essential guide for the non-financially trained manager.
The first part of this course begins by discussing how to manage cash including what is cashflow, cashflow statements and forecasts, and forward planning. Then explains how profit is not cash and how goods and services flow at different times, and in the opposite direction, to cash. Then discusses the reconciliation of profit to cash including the link between profit and cashflow. Then provides a detailed breakdown of the reconciliation statement.
The second part begins by explaining how to improve the cashflow through increasing operating profit, contracting businesses, decreasing stock, decreasing debtors, increasing creditors, reducing interest paid, reducing dividends paid, reducing or rescheduling capital expenditure, and increasing share capital and loans. Then discusses how efficient management of working capital is the key to successful cash management including the working capital cycle, how much working capital is required, how to reduce risks, how ratios measure working capital management performance, how to reduce working capital and how to drive out surplus investment.
LEARNING OUTCOMES:
By the end of this course, you will be able to understand:
- The medium of exchange
- What is cashflow?
- How to manage cashflows into and out of the business?
- The cashflow statement
- The cashflow forecasts
- Profit versus cash
- Why profit is not cash?
- What is profit?
- How goods and services flow at different times, and in the opposite direction, to cash?
- The reconciliation of profit to cash
- The reconciliation statement
- The link between profit and cashflow
- What is operating profit?
- What is depreciation?
- How increasing or decreasing the charge for depreciation will not affect the cash position?
- How increased investment in stock ties up cash?
- The difference between debtors and creditors
- What are interest, tax and dividends?
- What is capital expenditure?
- How to improve cashflow?
- How to increase operating profit?
- How to increase sales?
- How to maintain sales whilst decreasing costs?
- How to reduce interest paid?
- How to minimise borrowings and minimise rates?
- How to reduce tax paid?
- How to reduce dividends paid?
- How to reduce or reschedule capital expenditure?
- How to increase share capital and loans?
- What is working capital?
- How to manage working capital?
- Why efficient management of working capital is the key to successful cash management?
- The working capital cycle
- How much working capital is required?
- How much working capital should I have?
- How to reduce risks?
- How to measure performance?
- What is ratios?
- How ratios are used to express working capital management performance?
- What is stock days? And how to calculate them?
- What is debtor/creditor days? And how to calculate them?
- How to reduce working capital?
- How to make stock and debtors write-offs?
- How to drive out surplus investment?
- How to carry out a causal analysis?
- How to move towards J.I.T.?
COURSE DURATION:
The typical duration of this course is approximately 2-3 hours to complete. Your enrolment is Valid for 12 Months. Start anytime and study at your own pace.
COURSE REQUIREMENTS:
You must have access to a computer or any mobile device with Adobe Acrobat Reader (free PDF Viewer) installed, to complete this course.
COURSE DELIVERY:
Purchase and download course content.
ASSESSMENT:
A simple 10-question true or false quiz with Unlimited Submission Attempts.
CERTIFICATION:
Upon course completion, you will receive a customised digital “Certificate of Completion”.