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Money Day

Money Day. From Profit to Cash: Over the River and Through the Woods. Session Objectives. After completing this session, you will be able to:. Define the four forces that affect your cash flow Apply a cash flow model to your business and analyze the results

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Money Day

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  1. Money Day From Profit to Cash: Over the River and Through the Woods

  2. Session Objectives After completing this session, you will be able to: • Define the four forces that affect your cash flow • Apply a cash flow model to your business and analyze the results • Develop a cash flow management plan that works for you

  3. From Profit to Cash… The problem with cash flow is that it lags behind profit for most businesses.

  4. Activity #1 Populating the Cash Flow Model

  5. Activity #1 Summary • Forecast profitability first, then the cash flow impacts of that profitability second. • Once you forecast cash flow, you can begin to manage it. • Use the levers in the model to see future growth.

  6. Break • 10 Minutes

  7. The Four Forces of Cash Flow Cash Flow Force # 1: Pay Taxes Cash Flow Force # 2: Pay Down Debt Cash Flow Force # 3: Build to a Core Capital Target Cash Flow Force # 4: Pay Profit Distributions Ka-Ching!

  8. Activity #2 Forecasting Cash Flow

  9. Maximizing Cash Flow • Impact of Terms • Impact of increasing / decreasing margin • Increasing LER • Eliminating Non-value added expenses • Discuss Value vs. Non-Value added spreadsheet

  10. Activity #2 Summary • The Four Forces of Cash Flow drive the priorities for your available cash • Constantly re-forecast

  11. Common Cash Flow Mistakes • Mishandling Deposits • Trying to “Bully” the Big Guys • Focusing on CF to the detriment of profit • Not tracking leading indicators

  12. Case Study: Springfield ReManufacturing Corporation • A good example of a good example • Employee-owned • Culture of ownership: everyone knows and understands the company’s financials

  13. Case Study: Groupon • A good example of a bad example • High-risk cash flow management • Lacks culture and cash

  14. Session Wrap-Up • Profitability and cash are in two different time cycles • Leaving cash in the business is a choice • Bow to the Four Forces of Cash Flow

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