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The Times 100 Business Case Studies Edition 15

The Times 100 Business Case Studies Edition 15. Controlling cash flow for business growth CIMA. Introduction. CIMA – the Chartered Institute of Management Accountants The world’s leading professional body for management accountancy Has over 172,000 members in 168 countries

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The Times 100 Business Case Studies Edition 15

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  1. The Times 100 Business Case StudiesEdition 15 Controlling cash flow for business growth CIMA

  2. Introduction • CIMA – the Chartered Institute of Management Accountants • The world’s leading professional body for management accountancy • Has over 172,000 members in 168 countries • Offers the most relevant financial qualification for business • Management accountants • Involved in all sectors of industry • Often in high level roles • Forecast, monitor trends and control cash flow

  3. Cash flow • Cash is vital to longer term trading • Cash inflow from eg sales • Cash outflow from eg costs of goods or labour • More money spent than received = negative cash flow • Cash is a ‘liquid asset’ • Available for investment • Avoids having to seek credit or loans

  4. Balances cash inflow against cash outflow Lack of cash can: lead to business failure affect the business’ reputation The cash flow cycle

  5. Improving cash flow • Businesses need to manage cash flow • Pay as little interest as possible • Pay debts on time; consolidate at low interest • Negotiate payment terms with suppliers • Avoid offering discounts • Make better use of assets • eg hire out warehouse space

  6. Benefits of effective management accounting • Reduces uncertainty • Helps to predict and plan for the future • Ensures enough cash to cover debts or possible shortfalls • Reduces unnecessary costs • Makes cash work for the business

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