Cash Flow Management - Belmont University：现金流管理-贝尔蒙特大学
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Typically Measured in Months (sometimes in weeks or days)
Gives time measure of cash remaining
© Mar Out of Cash
Decrease bleed by cutting costs Decrease time to break-even by accelerating
Profits
0 Cash flow
Start-u©pMtaorkETa. rSlcyheSntkaegl e
Growth Stage
Maturity
3
Reasons for Cash Flow Problems
Difficulty in collecting receivables (example) Seasonality of sales (example) Unexpected variation in sales Policies on how payments are made to suppliers
Bleed rate = monthly negative cash flow
Understand source of bleed
If business has operating bleed focus on time to operating break-even
If business has operational positive cash flow, keep overhead and new fixed costs to a minimum until overall positive cash flow is achieved
Cash Flow from Operating Activities Cash Flow from Investing Activities Cash Flow from Financing Activities
© Mark T. Schenkel
5
Bleed Rate
In periods of negative cash flow, entrepreneur must measure and understand the “bleed rate” of the venture
© Mark T. Schenkel
9
Managing Cash During Inflation
Don't lock into long-term contracts that have narrow margins with large customers
When inflation heats up even a little, be aggressive with frequent small price increases rather than waiting and trying to catch up at some point with one big jump
Build cash reserves to buffer short term price increases that precede higher prices on your part
Watch your margins carefully. Worry about growing profits, not sales
(example) Large expenditures up front for customer projects Capital projects Ineffective inventory management
© Mark T. Schenkel
4
Measuring Cash Flow
Cash Flow Management
Dr. Mark T. Schenkel ETP 3700
© Mark T. Schenkel
Cash Flow
“Cash is King” Life blood of business Cash flow related financial reports are most
© Mark T. Schenkel
6
Time Out of Cash
Cash on Hand + Cash Available from Financing Sources
TOC = _____________________________________________
Monthly Bleed Rate
Pay down variable interest loans ASAP to avoid interest rate hikes in the future
© Mark T. Schenkel
10
important (even more important than Income Statement) Understand cash versus accrual
© Mark T. Schenkel
2
Figure 9-1 Example of Cash Flow Cycle Over the Life Cycle of a Business
sales growth If pricing is inelastic, price increase possible Raise more money….
© Mark T. Schenkel
8
Managing Cash During Inflation
Keep overhead low – Did I mention that Cash is King??
Gives time measure of cash remaining
© Mar Out of Cash
Decrease bleed by cutting costs Decrease time to break-even by accelerating
Profits
0 Cash flow
Start-u©pMtaorkETa. rSlcyheSntkaegl e
Growth Stage
Maturity
3
Reasons for Cash Flow Problems
Difficulty in collecting receivables (example) Seasonality of sales (example) Unexpected variation in sales Policies on how payments are made to suppliers
Bleed rate = monthly negative cash flow
Understand source of bleed
If business has operating bleed focus on time to operating break-even
If business has operational positive cash flow, keep overhead and new fixed costs to a minimum until overall positive cash flow is achieved
Cash Flow from Operating Activities Cash Flow from Investing Activities Cash Flow from Financing Activities
© Mark T. Schenkel
5
Bleed Rate
In periods of negative cash flow, entrepreneur must measure and understand the “bleed rate” of the venture
© Mark T. Schenkel
9
Managing Cash During Inflation
Don't lock into long-term contracts that have narrow margins with large customers
When inflation heats up even a little, be aggressive with frequent small price increases rather than waiting and trying to catch up at some point with one big jump
Build cash reserves to buffer short term price increases that precede higher prices on your part
Watch your margins carefully. Worry about growing profits, not sales
(example) Large expenditures up front for customer projects Capital projects Ineffective inventory management
© Mark T. Schenkel
4
Measuring Cash Flow
Cash Flow Management
Dr. Mark T. Schenkel ETP 3700
© Mark T. Schenkel
Cash Flow
“Cash is King” Life blood of business Cash flow related financial reports are most
© Mark T. Schenkel
6
Time Out of Cash
Cash on Hand + Cash Available from Financing Sources
TOC = _____________________________________________
Monthly Bleed Rate
Pay down variable interest loans ASAP to avoid interest rate hikes in the future
© Mark T. Schenkel
10
important (even more important than Income Statement) Understand cash versus accrual
© Mark T. Schenkel
2
Figure 9-1 Example of Cash Flow Cycle Over the Life Cycle of a Business
sales growth If pricing is inelastic, price increase possible Raise more money….
© Mark T. Schenkel
8
Managing Cash During Inflation
Keep overhead low – Did I mention that Cash is King??