Nicolas Boucher Online on LinkedIn: How to Manage Cash I've compiled the most important aspects in managing… | 10 comments (2024)

Want to improve your cash flow? Follow Nick Boucher's infographic!

How to Manage CashI've compiled the most important aspects in managing and improving your cash flow.Here's what you should now:❇️Managing Cash Flow1. Create a cash flow forecast2. Manage accounts receivable3. Control expenses4. Manage accounts payable5. Maintain adequate working capital6. Monitor cash flow regularly7. Use a cash action plan❇️Cash Do's and Don'tsDo's:• Regularly update cash flow forecasts• Maintain separate accounts for personal & business expenses• Build and maintain cash reserve for emergencies• Base sales projections on history & sales team insights• Challenge terms and negotiate favorable terms for you• Implement a dunning & escalation process• Develop a cash management plan with your team• Review and cut costs like it’s your own money• Establish a structured repayment plan• Analyze the cycle for insights (use CCC: Cash Conversion Cycle)Don'ts• Undervalue projecting cash flow• Mix personal and business finances• Lack an emergency fund• Set unrealistic expectations on sales projections• Always accept standard payment terms from vendors/suppliers• Ignore overdues and collection processes• Leave cash flow to chance• Spend like it’s not your cash• Ignoring what is your debt repayment plan• Lack awareness of cash flow patterns❇️Cash Flow Activities1. Operating ActivitiesCash in• Money received from sales• Commission and Fees• Money received from other incomes• Royalties• SubventionsCash out• Money paid for inventories• Money paid for expenses• Money paid for tax• Payment to creditors• Payment of wages2. Investing ActivitiesCash in• Money received from the sale of assets• Fixed deposits maturing• Sale of Investment• Interest received• Dividend receivedCash out• Acquisition of CAPEX• Buying properties• Investing in fixed deposits• Purchase of Investments3. Financing ActivitiesCash in• Money received from issuing shares• Money received from obtaining loansCash out• Money used for repaying loans• Company's stock repurchase• Cash dividend❇️9 Levers to Improve Cash Flow1. Sales: Improve payment terms with clients, accelerate the closing of deals2. Finance: Automate reporting, escalate collection issues, use factoring3. Collection of Overdues: Automate the dunning process + escalate significant issues to management & account manager4. Project: Compute and monitor the cash balance of each project5. Sales Administration: Optimize the process between a cash milestone achievement and the issuance of the debit note to your client6. Procurement: Avoid down payment and push the payment terms as far as possible7. Inventory: Monitor level of inventory against forecasted sales, reduce lead time, optimize stock buffer8. Management: Translate cash targets in team & individual objectives, put cash on the management reviews agenda, follow up cash as KPI9. Culture: Communicate, explain, repeat: it’s a culture shift

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How to Manage CashI've compiled the most important aspects in managing and improving your cash flow.Here's what you should now:❇️Managing Cash Flow1. Create a cash flow forecast2. Manage accounts receivable3. Control expenses4. Manage accounts payable5. Maintain adequate working capital6. Monitor cash flow regularly7. Use a cash action plan❇️Cash Do's and Don'tsDo's: • Regularly update cash flow forecasts• Maintain separate accounts for personal & business expenses• Build and maintain cash reserve for emergencies• Base sales projections on history & sales team insights• Challenge terms and negotiate favorable terms for you• Implement a dunning & escalation process• Develop a cash management plan with your team• Review and cut costs like it’s your own money• Establish a structured repayment plan• Analyze the cycle for insights (use CCC: Cash Conversion Cycle)Don'ts• Undervalue projecting cash flow• Mix personal and business finances• Lack an emergency fund• Set unrealistic expectations on sales projections• Always accept standard payment terms from vendors/suppliers• Ignore overdues and collection processes• Leave cash flow to chance• Spend like it’s not your cash• Ignoring what is your debt repayment plan• Lack awareness of cash flow patterns❇️Cash Flow Activities1. Operating ActivitiesCash in• Money received from sales• Commission and Fees• Money received from other incomes• Royalties• SubventionsCash out• Money paid for inventories• Money paid for expenses• Money paid for tax• Payment to creditors• Payment of wages2. Investing ActivitiesCash in• Money received from the sale of assets• Fixed deposits maturing• Sale of Investment• Interest received• Dividend receivedCash out• Acquisition of CAPEX• Buying properties• Investing in fixed deposits• Purchase of Investments3. Financing ActivitiesCash in• Money received from issuing shares• Money received from obtaining loansCash out• Money used for repaying loans• Company's stock repurchase• Cash dividend❇️9 Levers to Improve Cash Flow1. Sales: Improve payment terms with clients, accelerate the closing of deals2. Finance: Automate reporting, escalate collection issues, use factoring3. Collection of Overdues: Automate the dunning process + escalate significant issues to management & account manager4. Project: Compute and monitor the cash balance of each project5. Sales Administration: Optimize the process between a cash milestone achievement and the issuance of the debit note to your client6. Procurement: Avoid down payment and push the payment terms as far as possible7. Inventory: Monitor level of inventory against forecasted sales, reduce lead time, optimize stock buffer8. Management: Translate cash targets in team & individual objectives, put cash on the management reviews agenda, follow up cash as KPI9. Culture: Communicate, explain, repeat: it’s a culture shift

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How to Manage Cash:❇️Managing Cash Flow1. Create a cash flow forecast2. Manage accounts receivable3. Control expenses4. Manage accounts payable5. Maintain adequate working capital6. Monitor cash flow regularly7. Use a cash action plan❇️Cash Do's and Don'tsDo's:• Regularly update cash flow forecasts• Maintain separate accounts for personal & business expenses• Build and maintain cash reserve for emergencies• Base sales projections on history & sales team insights• Challenge terms and negotiate favorable terms for you• Implement a dunning & escalation process• Develop a cash management plan with your team• Review and cut costs like it’s your own money• Establish a structured repayment plan• Analyze the cycle for insights (use CCC: Cash Conversion Cycle)Don'ts• Undervalue projecting cash flow• Mix personal and business finances• Lack an emergency fund• Set unrealistic expectations on sales projections• Always accept standard payment terms from vendors/suppliers• Ignore overdue and collection processes• Leave cash flow to chance• Spend like it’s not your cash• Ignoring what is your debt repayment plan• Lack awareness of cash flow patterns❇️Cash Flow Activities1. Operating ActivitiesCash in• Money received from sales• Commission and Fees• Money received from other incomes• Royalties• SubventionsCash out• Money paid for inventories• Money paid for expenses• Money paid for tax• Payment to creditors• Payment of wages2. Investing ActivitiesCash in• Money received from the sale of assets• Fixed deposits maturing• Sale of Investment• Interest received• Dividend receivedCash out• Acquisition of CAPEX• Buying properties• Investing in fixed deposits• Purchase of Investments3. Financing ActivitiesCash in• Money received from issuing shares• Money received from obtaining loansCash out• Money used for repaying loans• Company's stock repurchase• Cash dividend❇️9 Levers to Improve Cash Flow1. Sales: Improve payment terms with clients, accelerate the closing of deals2. Finance: Automate reporting, escalate collection issues, use factoring3. Collection of Overdue: Automate the dunning process + escalate significant issues to management & account manager4. Project: Compute and monitor the cash balance of each project5. Sales Administration: Optimize the process between a cash milestone achievement and the issuance of the debit note to your client6. Procurement: Avoid down payment and push the payment terms as far as possible7. Inventory: Monitor level of inventory against forecasted sales, reduce lead time, optimize stock buffer8. Management: Translate cash targets in team & individual objectives, put cash on the management reviews agenda, follow up cash as KPIs9. Culture: Communicate, explain, repeat: it’s a culture shift

Cash flow is crucial for all businesses in this current market and those specifically in the Construction Industry. Here are some ideas you could consider when looking to improve your cashflow:- Track your cash flow. You need to understand where your money is coming from and going. Create a cash flow forecast to track your cash inflows and outflows on a regular basis. You can compare this to your budgets to see where income and expenses differ from your expectations.- Get paid faster.One of the biggest challenges for cash flow is slow payments from customers. If you can get paid faster, you will have more cash available to meet your expenses. Consider offering discounts for early payment or invoicing customers electronically.- Negotiate better terms with suppliers.If you can negotiate longer payment terms with your suppliers, you will have more time to collect payments from your customers before you have to pay your supplier. This can free up some cash flow in the short term.- Reduce your expenses.Another way to improve cash flow is to reduce your expenses. This may mean cutting back on unnecessary spending, negotiating lower prices with suppliers, or finding ways to do things more efficiently.- Increase your prices.If you can increase your prices, you will generate more cash flow from each sale. However, you need to be careful not to increase your prices so much that you lose customers.- Consider financing options.If you are struggling to improve your cash flow on your own, you may want to consider financing options. There are a variety of financing options available, such as loans, lines of credit, and factoring.- Manage your inventory carefully.Make sure you have enough inventory to meet demand, but not so much that you are tying up cash in unsold products. - Pay attention to your receivables.Follow up with customers who are late on payments and take steps to collect outstanding debts.- Incorporate a cash management system.A cash management system can help you track your cash flow and identify areas where you can improve.- Get help from a financial advisor.If you are struggling to improve your cash flow on your own, a financial advisor can help you develop a plan to improve your cash flow.Improving cash flow can be a challenge, but it is essential for the long-term health of your business.Please get in contact if you'd like to learn more about your cashflow.#business #management #constructionindustry #cashflow #cashflowmanagement #cashflowforecasting #cashflowoptimization #financeandaccounting #accounting #accountingservices #accountingfirm #smallbusiness #businessaccounting #businessadvice #businessadvisory #planning #budgeting

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Stop chasing invoices and start counting cash. Let's flip the script on Account Receivables. Before: My days were a swirl of frustration, chasing down unpaid invoices. My business was drowning in profits, but my bank account told a different story. After: Today, my bank account matches my balance sheet. I've turned Account Receivables from a dreaded chore into an effective cash flow strategy. The Bridge: So, how did I get here? 1. I stopped equating sales with profits. It’s not profit until it’s paid. This mindset shift was crucial to my business transformation. 2. I implemented a strict credit policy. No more extending credit to everyone. Now, it’s a privilege earned by reliable clients. 3. I invested in a dedicated accounts receivable software. Automated reminders and streamlined tracking took the burden off my shoulders. 4. I offered incentives for early payments. A small discount for prompt payment motivates my clients to settle their invoices sooner. 5. I started invoicing accurately and promptly. No more delays or errors in invoicing - this alone accelerated payments significantly. 6. I regularly reviewed my debtors list. Keeping a close eye on who owes you what can help you foresee potential cash flow problems. So, no more celebrating profits that are just numbers on a report. It's time to see real money in the bank. Are you ready to transform your account receivables strategy? Start implementing these steps today and witness your profits truly become profits.

How good are you at working capital management?It often comes down to handling your accounts receivables and payables..Let's consider a few ways to do this and also assess the impact on your provisions for bad debt.It's the Accounts receivables vs. Accounts payables vs. Bad debt provision Showdown!ACCOUNTS RECEIVABLESAccounts receivables represent the amounts owed to a company by its customers or clients for goods or services that have been delivered but not yet paid for.It's essentially the company's outstanding invoices and a form of short-term credit extended to customers.Financial Statement ImpactAccounts receivables are reported as a current asset on the balance sheet.Any changes in accounts receivables are reflected on the balance sheet and the income statement, with increases or decreases affecting the company's net income.Four ways to optimize accounts receivables1. Credit policies2. Invoice management3. Collection practices4. Customer segmentationACCOUNTS PAYABLESAccounts payables are the amounts that a company owes to its suppliers or vendors for goods or services received but not yet paid.It represents the company's short-term liabilities.Financial Statement ImpactAccounts payables are reported as a current liability on the balance sheet. Changes in accounts payables affect the company's working capital and cash flow, with increases or decreases impacting the statement of cash flows.Four ways to optimize accounts payables1. Supplier negotiations2. Invoice processing3. Cash flow management4. Dynamic discountingBAD DEBT PROVISIONThe bad debt provision represents an estimate of the portion of accounts receivables that is expected to be uncollectible.It's an accounting provision made to account for the possibility of customers defaulting on their payment obligations.Financial Statement ImpactThe bad debt provision is reported as an expense on the income statement, reducing the company's net income.The provision for bad debts also adjusts the carrying amount of accounts receivables on the balance sheet, reflecting the estimated net realizable value.Four ways to optimize bad debt provision1. Credit risk assessment2. Collection policies3. Data analysis4. Predictive analytics----------How are you managing working capital in your company?Anything you'd like to add to this overview or success stories you'd like to share?🧑💼 I'm a partner at Business Partnering Institute🆘 Need immediate help in your finance team, call us!🤝 We help increase the influence of your finance team🔔 To see more of my content, hit the bell on my profile📻 Find our#FinanceMasterpodcast on your podcast channel📄 Check out all our templates and cheat sheets here:https://lnkd.in/eC_zuCU4

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Running a successful business requires not only generating sales but also efficiently managing your cash flow. One essential financial metric that can help you achieve this is the Accounts Receivable Turnover Ratio. This ratio provides valuable insights into your credit and collections performance, helping you optimize your working capital and maintain a healthy cash flow.What is Accounts Receivable Turnover Ratio https://lnkd.in/gBc_hFDq #SmallBusiness #Construction #RealEstate #Accounting

How We Increased Cash Flow 💰 💰 for a Supplier of Automotive Parts 🚗 Running a business presents many difficulties each day. Cash flow issues, stagnation, and trouble-making decisions are a few of the most prevalent pain concerns we observe among our clients.Do you have trouble keeping your business afloat? Are you feeling trapped and unsure of how to proceed? It's not just you.At Sunny Consulting Services, we can assist you in locating the underlying reasons behind your problems and creating a plan of action to deal with them. Together, you and our team of professionals will examine the data from your company and create a plan that is specifically tailored to your requirements.Problem: As a consultant working with a supplier of car parts, we noticed that the business was having cash flow issues. The business was struggling to satisfy its financial responsibilities despite a steady stream of orders and was in danger of defaulting on its payments & loans.Identification: After carefully examining the company's financial documents, we discovered several areas that needed improvement. First, we discovered that the business had a lot of inventory, which was restricting its ability to use cash. The business was hauling a lot of slow-moving and out-of-date parts that were wasting valuable warehouse space and not making any money.Second, we discovered that the business's accounts receivable procedure was poor and was leading to delays in getting payments from clients. The business did not have a credit policy in place and allowed clients to pay their invoices later than necessary.Steps Taken: In order to address these concerns, we suggested that the business put in place an inventory management system that would enable them to more accurately keep track of their stock levels and prevent overstocking. We also suggested that the business thoroughly assess its inventory and get rid of any old or inefficient parts.We advised the business to create a clear credit policy outlining the conditions of payment and the repercussions of late payments in order to enhance the accounts receivable process. We also suggested that the business put in place an automatic invoicing system that would notify clients who were past due for payments.Finally, we advised the company to enhance its cash flow by negotiating better payment terms with its suppliers and looking into alternative financing possibilities.Positive Result: By putting these suggestions into practice, the business was able to increase cash flow and decrease inventory levels, which freed up warehouse space and cut holding expenses. The company's accounts receivable procedure also witnessed improvement, which sped up payments and decreased the amount of bad debt. The business was able to pay its debts and engage in business expansion prospects thanks to a stronger cash flow.Get in touch with us today!!#consulting #business #coaching #growth #profitability

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