money day from profit to cash: over the river and through the woods
TRANSCRIPT
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Money Day
From Profit to Cash: Over the River and Through the Woods
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Session Objectives
After completing this session, you will be able to:
• Define the four forces that affect your cash flow
• Apply a cash flow model to your business and analyze the results
• Develop a cash flow management plan that works for you
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From Profit to Cash…
The problem with cash flow is that it lags behind profit for most businesses.
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Activity #1
Populating the Cash Flow Model
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• Forecast profitability first, then the cash flow impacts of that profitability second.
• Once you forecast cash flow, you can begin to manage it.
• Use the levers in the model to see future growth.
Activity #1 Summary
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• 10 Minutes
Break
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Cash Flow Force # 1: Pay Taxes
Cash Flow Force # 2: Pay Down Debt
Cash Flow Force # 3: Build to a Core Capital Target
Cash Flow Force # 4: Pay Profit Distributions
The Four Forces of Cash Flow
Ka-Ching!
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Activity #2
Forecasting Cash Flow
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• Impact of Terms
• Impact of increasing / decreasing margin
• Increasing LER
• Eliminating Non-value added expenses
• Discuss Value vs. Non-Value added spreadsheet
Maximizing Cash Flow
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• The Four Forces of Cash Flow drive the priorities for your available cash
• Constantly re-forecast
Activity #2 Summary
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• Mishandling Deposits
• Trying to “Bully” the Big Guys
• Focusing on CF to the detriment of profit
• Not tracking leading indicators
Common Cash Flow Mistakes
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• A good example of a good example
• Employee-owned
• Culture of ownership: everyone knows and understands the company’s financials
Case Study: Springfield ReManufacturing Corporation
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• A good example of a bad example
• High-risk cash flow management
• Lacks culture and cash
Case Study: Groupon
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• Profitability and cash are in two different time cycles
• Leaving cash in the business is a choice
• Bow to the Four Forces of Cash Flow
Session Wrap-Up
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