Lecture on Cash Management for Farmers

2. CASH
MANAGEMENT
JAP ASENCE
AGRICULTURAL TECHNICIAN I
CITY AGRICULTURE OFFICE
NAGA CITY

3. What we will discuss
I. Introduction
II. Basic Cash Flow Concepts
III. Personal Budgeting
IV. Basic Record-keeping

4. Reasons for Holding Cash
• Speculative motive – hold cash to take advantage
of unexpected opportunities
• Precautionary motive – hold cash in case of
emergencies
• Transaction motive – hold cash to pay the day-to-
day bills
• Trade-off between opportunity cost of holding
cash relative to the transaction cost of converting
marketable securities to cash for transactions

5. Cash Management
• The process of forecasting,
collecting, disbursing, investing, and
planning for the cash a company
needs to operate smoothly.

6. Cash Flow Uses
• It establishes how much money is needed and
when it will be needed
• It helps to ensure that capital expenditure is
properly controlled (e.g. the 'what if'
situation)
• - It encourages efficient use of resources
through budgeting and the analysis of over
• and under spending
• It helps with facing facts and decision making

7. Benefits of Cash Management
• Increase amount and speed of cash flowing
into the company
• Reduce the amount and speed of cash
flowing out
• Make the most efficient use of available cash
• Take advantage of money-saving
opportunities such as cash discounts

8. Benefits of Cash Management
• Finance seasonal business needs
• Develop a sound borrowing and repayment
program
• Impress lenders and investors
• Reduce borrowing costs by borrowing only
when necessary
• Provide funds for expansion
• Plan for investing surplus cash

9. Basic Cash Flow Concepts
INCOME

10. EXPENSES

11. ASSETS

12. LIABILITIES

25. Paano ba yumaman?
• Mag-ipon ng pera
• Matuto mag-budget ng pera. Bumili ng mga
gamit na kinakailangan lamang.
• Maging maayos at matipid sa gamit.
• At patuloy na isipin ang bukas. Maglaan ng
emergency savings bago magwaldas ng pera.

26. Iba pang paraan kung pano yumaman
• Maging talentado at patuloy na pagbutihin ang
kakayanan upang umusbong ang karera.
• Mag-tayo ng negosyo.
• Anak ng mayaman para maraming taong
makikilala (hindi lamang ang iyong magulang at
pamilya) na maaring magbigay sa’yo ng
magagandang oportunidad na kumita ng pera.
• Kung hindi anak mayaman, kailangan matutong
maghanap ng mga bagong kakilala upang lalong
dumami ang oportunidad sa trabaho o negosyo.
• Tumaya sa lotto.
• Maging tagapagmana.

31. PERSONAL
BUDGETING
WORKSHOP

35. RECORDKEEPING
• Accurate and complete records enable you,
and your accountant, to identify all your
business assets, liabilities, income and
expenses. That information, when compared
to appropriate industry averages, helps you
pinpoint both the strong and weak phases of
your business operations.

36. RECORDKEEPING
• Good records are essential for the preparation
of current financial statements, such as the
income statement (profit and loss) and cash-
flow projection. These statements, in turn, are
critical for maintaining good relations with
your banker. They also present a complete
picture of your total business operation,
which will benefit you as well.

37. RECORDKEEPING
Good records are critical at tax time. Poor
records could cause you to underpay or
overpay your taxes. In addition, good records
are essential during an audit, if you hope to
answer questions accurately and to the
satisfaction of the auditor.

38. BASIC RECORDKEEPING SYSTEM
• A basic journal to record transactions
(receipts, disbursements, sales, purchases,
etc.)
• Accounts receivable records
• Accounts payable records
• Payroll records
• Petty cash records
• Inventory records

39. HINTS AND TIPS
4S APPROACH
S is for...system
• Spend time setting up a system which you
stick to. Allocate a regular time every
week/month to deal with your financial
administration, or make it a key task for a
trusted employee. File your records logically -
put receipts in date-marked envelopes or
folders and file bank statements in order.

40. 4S APPROACH
S is for separate
• One of the biggest mistakes business owners
make is to mix their personal and professional
finances. It is best to treat the business as a
separate person, from which you only take
income in the form of wages, dividends and in
claiming back business expenses against
receipts. So keep it separate - and simple.

41. 4S APPROACH
S is for security
• The fewer people involved in your record-
keeping, the fewer the errors that are likely to
creep in. Make it very clear whose
responsibility it is to maintain records. It is a
good idea to password-protect your computer
records, and only divulge the password to a
small number of people.

42. 4S APPROACH
S is for (safe) storage
• Even if you choose to keep all your records on
a computer, it is vital that you keep a regular
(weekly, if not nightly) electronic back-up, and
a paper copy elsewhere. Store records that
cannot be copied, such as chequebook stubs
and paying-in books, in a fireproof box.

43. CASH IN, CASH OUT

45. References
• http://blog.invest-safely.com/2012/03/15/managing-
your-personal-finances-using-cashflow-diagrams/
• http://fso.cpasitesolutions.com/premium/bs/fg/fg-
records.html#C
• http://business.wales.gov.uk/finance-funding-
support/finance-and-accounts-cashflow-budgeting-
debt-recovery/set-basic-record-keeping-system-0

46. SALAMAT PO