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Taking control of your business what you need to know about cashflow
- 2. “Taking charge of your business …what you need to know about cash-flow …”
- 3. …cash-flow …
- 6. Suppliers Payroll Sales & Other Overheads Inflows Taxes Interest Loans & Leases
- 7. Stark situation... • 72 • 122,000 • 38% • € 29bn
- 8. Stark situation... • Getting paid • Getting access to bank facilities • PPL – a sham • You MUST plan
- 9. Proposed headings ... • Symptoms – Counting the beans • Quicksand – Breakeven • Friend or foe – The Revenue • Clearing House – Banks • Kingmaker – Cash Flow • The Ace – Communications • Winner – Pragmatism
- 13. Can you tell? ...
- 14. FACT ... Most businesses make money on some activates, lose on others and many businesses are unaware of where in their business this happens ...
- 15. FACT ... All businesses have all the data they need to answer all of these questions ...
- 16. FACT ... Few businesses „manage‟ or process their data input so as to provide the above information, yet most do ALL the work necessary to have it available ...
- 17. FACT ... Most businesses rely on the „accountant‟s annual accounts‟ as a key source of information – yet these accounts provide one historical figure each for Sales and Cost of Sales ...
- 18. Define your needs ... • „Core’ accounting system – Sales – Receipts – Purchases – Payments – VAT calculation – Bank reconciliations
- 19. Define your needs ... • „Bells’ & ‘Whistles’ – Departmental analysis – Job analysis – Contract analysis – Fixed costs – Variable costs – Wages analysis
- 20. Numbers ‘visibility’... Sales Sales Sales minus minus minus
- 21. Numbers ‘visibility’... Sales Sales Sales minus minus minus Variable Costs Variable Costs Variable Costs gives gives gives
- 22. Numbers ‘visibility’... Sales Sales Sales minus minus minus Variable Costs Variable Costs Variable Costs gives gives gives Contribution Loss Contribution pays pays pays FIXED OVERHEADS PROFIT
- 23. Maximise ... 2 Sales Sales Sales minus minus minus Variable Costs Variable Costs Variable Costs gives gives gives 1 Contribution Loss Contribution pays pays pays FIXED OVERHEADS PROFIT
- 24. Minimise ... Sales Sales Sales minus minus minus 1 Variable Costs Variable Costs Variable Costs gives gives gives Contribution Loss Contribution pays pays pays 2 FIXED OVERHEADS PROFIT
- 26. Break-even Analysis ... Information needed to determine Operating Break- even & Cash-flow Breakeven ...
- 27. Breakeven Analysis ... If you change selling price, what happens to profits? If you reduce costs or expenses, how much more profit will you earn? At a given sales volume, what will the profit be? If you intend to earn a certain profit, how much will you have to sell to achieve your goal?
- 28. What happens if you ... Hire another employee? Start using cheaper materials? Buy a more efficient machine? Seek a general wage reduction?
- 29. Translate B/E into ... What sales do I need each week to break-even? How many units must I sell every day? How many chargeable hours do I need per month to cover all costs?
- 30. Friend or Foe The Revenue
- 32. Revenue smart ... • Stay up-to-date with returns • VAT – Separate Bank Account • Wages – Separate Bank Account
- 33. Clearing House Banks
- 35. Banks ... • Account in second bank … NOW • Transfer regularly … however little • Overdraft – live under the rafters • Keep talking – saying little • Cannot get a ‘quart’ from a ‘pint’ glass
- 37. Inflows ...
- 39. Outflows ...
- 40. Cash Flow Forecast ...
- 41. Cash Flow Forecast ... Cash Flow 06-Mar 13-Mar 20-Mar 27-Mar 03-Apr 10-Apr 17-Apr Inflows Debtors 7,872 8,338 8,256 6,118 9,368 8,500 9,000 VAT Refund 3,271 Total Inflows 7,872 8,338 8,256 9,389 9,368 8,500 9,000 Outflows Creditors 3,150 3,122 4,860 3,688 3,750 3,500 3,500 Wages 3,608 3,608 3,608 5,912 3,608 3,608 5,912 PAYE / PRSI 2,811 2,811 Leases 868 1,018 868 1,018 Total Outflows 6,758 10,409 9,486 9,600 7,358 7,976 13,241 Net Cash Flow 1,114 (2,071) (1,230) (211) 2,010 524 (4,241) Overdraft - Opening (17,105) (15,991) (18,062) (19,292) (19,503) (17,493) (16,969) Overdraft - Closing (15,991) (18,062) (19,292) (19,503) (17,493) (16,969) (21,210)
- 44. Cash Flow Forecast ... Cash Flow 06-Mar 13-Mar 20-Mar 27-Mar 03-Apr 10-Apr 17-Apr Inflows Debtors 6,872 7,338 8,256 6,118 9,368 8,500 9,000 VAT Refund 3,271 Total Inflows 6,872 7,338 8,256 9,389 9,368 8,500 9,000 Outflows Creditors 3,150 3,122 4,860 3,688 3,750 3,500 3,500 Wages 3,608 3,608 3,608 5,912 3,608 3,608 5,912 PAYE / PRSI 2,811 2,811 Leases 868 1,018 868 1,018 Total Outflows 6,758 10,409 9,486 9,600 7,358 7,976 13,241 Net Cash Flow 114 (3,071) (1,230) (211) 2,010 524 (4,241) Overdraft - Opening (17,105) (16,991) (20,062) (21,292) (21,503) (19,493) (18,969) Overdraft - Closing (16,991) (20,062) (21,292) (21,503) (19,493) (18,969) (23,210)
- 45. Cash Flow Forecast ... Cash Flow 06-Mar 13-Mar 20-Mar 27-Mar 03-Apr 10-Apr 17-Apr Inflows Debtors 7,872 8,338 8,256 6,118 9,368 8,500 VAT Refund 3,271 Total Inflows - 7,872 8,338 11,527 6,118 9,368 8,500 Outflows Creditors 3,150 3,122 4,860 3,688 3,750 3,500 Wages 3,608 3,608 3,608 5,912 3,608 3,608 5,912 PAYE / PRSI 2,811 2,811 Leases 868 1,018 868 1,018 Total Outflows 3,608 10,437 7,748 10,772 7,296 8,226 13,241 Net Cash Flow (3,608) (2,565) 590 755 (1,178) 1,142 (4,741) Overdraft - Opening (17,105) (20,713) (23,278) (22,688) (21,933) (23,111) (21,969) Overdraft - Closing (20,713) (23,278) (22,688) (21,933) (23,111) (21,969) (26,710)
- 46. Cash Cycle ...
- 47. Cash Conversion Cycle ... Days Inventory Outstanding Days Sales Days Payables Outstanding Outstanding
- 48. Buying ...
- 49. Take a closer look ... Printing Costs Price Quality Service Level Advice Current Supplier My Current Printers Limited Comparison Comparison Comparison Offered Better Worse Equal None Mountain Top Print & Design Alternative 1 Limited 6% Inferior Paper Toureendaheny Beg Equal Worse Worse Equal Alternative 2 Print Services Inferior Paper Turnaround Ballyloughlaidirabu Worse Equal Equal Better Alternative 3 Print Limited -8%
- 51. Cost reduction ... or
- 52. 2012 ...
- 55. Communications ... • Customers • Suppliers • Revenue • Banks • Staff
- 57. Pragmatism ... • Diagnose the symptoms … • Treat the causes … • Don’t throw money at it … • Protect yourself … • Deals will be done …