1. BCEN 2900 Entrepreneurship
Chapter 12
Cash Flow Management

2. Cash Is King What does this mean? Why is everything about cash?
Where can cash go in the first few critical years?

3. Cash Flow Cycle
The time lag between needing to pay cash and receiving cash
Should be monitored daily!
Entrepreneurs need to be:
Cash Finders
Cash Planners
Cash Distributors
Cash Collectors
Cash Conservers

4. Cash and Profits You can be profitable and not have enough cash!
How does this happen?!
Profit: Difference between total revenues
Cash flow: The flow of cash into and out of a business over time.

5. Preparing a Cash Budget
Determine a minimum cash balance you can’t do without.
Forecast sales.
Forecast cash receipts.
Forecast cash disbursements.
Determine the end-of-the-month cash balance.

6. Where are the biggest problems in cash flow management?
Accounts receivable
Must have clear policies that are enforceable.
Must be able to accurately screen customers.
Send invoices promptly.
Act quickly.
Accounts payable
Stretch out payables to end of credit period, if no discounts are available for paying early.
Negotiate the best possible terms for credit.

7. Where are the biggest problems in cash flow management?
Inventory
A tightrope routine between too much and too little
The cost of holding inventory can be 1/3 of the value of the inventory!
Move stale inventory by having sales.
Point-of-sale systems can keep your inventory manageable.

8. How to Keep Your Cash Barter Cut overhead costs
Bartering exchanges
Cut overhead costs
Lease where possible.
Be frugal the first few years.
Have a great control system
Tracking costs
Tracking theft
Controlling bad checks
Budget and monitor daily.
Use sweep accounts.