generating a positive cash flow for your business march 2014
DESCRIPTION
TRANSCRIPT
Helping business owners make better decisions
1. Cash flow management = business success or failure
2. Profit ≠ cash flow surplus3. Making sales and margin is important4. Cash is needed to generate sales and
opportunities
Generating a POSITIVE CASH FLOW for Your Business
How will you achieve cash surpluses?1. Know your cash flow breakeven position2. Have a 90 day plan - Sales & Marketing3. Have up to date performance information4. Have a cash flow forecast5. Have a Plan B for cash shortfalls
Profit Does Not = Cash Flow Surplus
Profit
Working Capital
Loan Repayments
Capex
Drawings
Cash Flow Deficit
A Plan to Fix a Cash Flow Deficit
Cash Flow Surplus
Reduce Inventory
Collect Overdues
Improve Margin
Productivity
Cash Flow Deficit
Sales Growth
Up To Date Performance Information
• Sales activity• Gross margin target• Productivity • Profit target• Working capital• Cash flow target
***** Performance Report Sep-13
Month Year To Date Customer Sep Aug Jul Jun May Apr Total
Actual Budget Var Actual Budget Var 262,951 272,778 272,605 349,121 328,321 298,869 1,521,695 78%Revenue 351,911 314,644 37,267 2,291,723 1,899,915 391,808 70,425 54,614 50,796 36,478 44,023 36,855 222,765 11%Employment Costs 190,896 151,882 -39,014 1,302,211 835,972 -466,239 10,920 10,400 11,798 10,351 12,119 9,685 54,353 3%Other Direct Costs -3,162 0 3,162 8,697 0 -8,697 0 0 0 0 23,031 17,813 40,844 2%Gross margin 164,177 162,762 1,415 980,815 1,063,943 -83,128 21,000 20,438 18,000 0 0 0 38,438 2%Gross margin % 47% 52% 43% 56% 0 521 0 7,893 2,204 14,498 25,116 1%Operating Expenses 2,525 2,525 2,525 337 2,525 2,525 10,437 1%Employment Related 23,331 24,000 669 209,061 198,828 -10,233 1,733 0 0 0 0 9,925 9,925 1%Other Operating Costs 65,031 57,680 -7,351 352,229 346,080 -6,149 2,500 1,965 1,965 1,965 1,965 1,965 9,825 1%EBITDA 75,815 81,082 -5,267 419,525 519,035 -99,510 1,829 1,829 1,829 525 525 525 5,232 0%Depreciation 4,466 4,466 0 26,796 26,796 0 0 0 0 1,800 0 0 1,800 0%Interest -185 0 185 -767 767 373,883 365,069 359,518 408,469 414,713 392,660 1,940,429Tax 23,606 25,283 1,677 129,854 162,439 32,585PAT 47,928 51,333 -3,405 263,642 329,800 -66,158
Mix of Services Current MonthCustomer Profitability Month XX XX XX XX XX
Field Services
Prof Services
Project Mgt
Remote Services
Other Total Other Total
Revenue 121,379 45,998 37,595 140,600 6,339 351,911 Revenue 261,639 26,675 10,920 0 52,676 351,910Employment Costs 64,735 29,731 33,672 62,619 137 190,894 Direct Costs 126,781 27,552 7,800 -1,680 27,280 187,733Other Direct Costs -3,162 -3,162 Margin 134,858 -877 3,120 1,680 25,396 164,177Gross margin 59,806 16,267 3,923 77,981 6,202 164,179 Margin % 52% -3% 29% #DIV/0! 48% 47%Gross margin % 49% 35% 10% 55% 98% 47%
Mix of Services Year To DateCustomer Profitability Year To Date XX XX XX XX XX
Field Services
Prof Services
Project Mgt
Remote Services
Other Total Other Total
Revenue 830,442 216,713 358,304 857,746 28,518 2,291,723 Revenue 1,782,533 215,437 63,585 38,437 191,730 2,291,722Employment Costs 406,257 226,032 306,404 342,341 21,177 1,302,211 Direct Costs 755,540 210,195 48,986 33,682 262,503 1,310,906Other Direct Costs 3,771 1,751 95 3,080 8,697 Margin 1,026,993 5,242 14,599 4,755 -70,773 980,816Gross margin 420,414 -11,070 51,900 515,310 4,261 980,815 Margin % 58% 2% 23% 12% -37% 43%Gross margin % 51% -5% 14% 60% 15% 43% Cash Flow Forecast Next 3 Months
Oct Nov Dec 3 Months Other CommentaryDebtors Ageing Debtors 468,346 415,057 361,841 1,245,243
Opex 97,871 66,330 66,330 230,531Current 1 Mth 2 Mths + Total Payroll 175,882 175,882 175,882 527,645
Current Month 144,767 67,219 76,071 288,057 capex 5,136 5,136 5,136 15,40950% 23% 26% 100% GST 80,000 0 113,037 193,037
Tax 0Other 0Net Cash Flow 109,457 167,709 1,456 278,622
Financial Performance Forecast Performance Customer Revenue
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
4500000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Revenue
Actual- Forecast
Budget
0
200000
400000
600000
800000
1000000
1200000 EBITDA
Actual- Forecast
Budget
Cash Flow Forecast
Apr May June July Aug Sep
Collections
Operating Payments
Other Payments
Net Cash Flow
Cash Flow – Head Room
Apr May June July Aug Sep
Closing Cash BookBalance
Profit
Net Cash Flow
OD Limit
Plan B
Working Capital Management• Collect debtors• Clear surplus stock• Delay stock orders subject to sales• Extend credit with suppliersDefer Capex
Plan B
Communication
• Talk to your bank for additional facilities • Invoice financing• Provisional tax funding• Equipment leasing• Draw on cash reserves
Avoid IRD Late payment
Plan B
Communication
Knowing changes to your forecasts gives you time to adapt and plan the future
Your Plan Your Reality
Cash flow break even assessment - free Cash flow forecasting and management Monthly accounting and business systems 90 Day plans Sales & marketing
One hour SMEtric discussion – BOOK NOW
Need Help?
