1. Cash Flow Webinar April 25, 2012 11:00 a.m. – 12:00 p.m. EST

2. Developed by: Charles R. Chambers, MBA, CPA, CMA President 419-304-0285 www.crc@consultacfo.com Heather Bradley ORSCC President & CEO 419-309-4252 www.TheFlourshingCompany.com

3. Presenter: Charlie Chambers Full-time SBDC Counselor since 2010 Consulting business since 2008 CFO and Controller for a number of companies Adjunct faculty for graduate school University of Toledo Past President of Toledo Chapter of FEI (Financial Executives International CPA and CMA; MBA from University of Toledo

4. Learning Objectives: Understand the concept of cash flow. Understand the impact cash flow has on your business. Identify tools you can use immediately. Become aware of the need for a Cash Flow Statement and Cash Flow Forecast.

5. Cash Flow Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved. The Real Engine of Your Business

6. Company XYZ Cash Flow Statement Net Income 39.57 Depreciation 36.02 Deferred Taxes 16.43 Non-Cash Items -10.71 Accounts Receivable -15.26 Inventories 32.23 Prepaid Expenses 62.24 Other Assets 2.21 Accounts Payable 18.09 Payable / Accrued -0.57 Cash from Operating Activities 180.25 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

7. Company XYZ Cash Flow Statement Capital Expenditures -41.53 Acquisition of Business -30.48 Sale of Fixed Assets 9.8 Purchase of Investments -1.2 Cash from Investing Activities -63.41 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

8. Company XYZ Cash Flow Statement Financing Cash Flow Items -3.93 Cash Dividends Paid - Common -6.35 Issuance (Retirement) of Stock, Net 0.52 Long Term Debt, Net -42.83 Cash from Financing Activities -52.59 Net Change in Cash 64.25 Net Cash - Beginning Balance 81.68 Net Cash - Ending Balance 145.93 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

9. Understanding Cash Flow Will help you manage your business for profitability. Will help you meet the needs of lenders, suppliers and investors. Will help you pay your suppliers on time. Will help you pay your taxes and your bank on time. Will help you pay your employee withholding and sales taxes on time. Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

10. The Cash Flow Puzzler How can my Profit and Loss Statement say I made money BUT…… Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

11. The Cash Flow Puzzler How can my Profit and Loss Statement say I made money BUT…… I can’t pay my bills? Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

12. The Cash Flow Puzzler How can my Profit and Loss Statement say I made money BUT…… I can’t pay my bills? Answer: Cash Flow is the forgotten statement Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

13. The Cash Flow Puzzler Cash flow is NOT profit! Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

14. What is Cash Flow? Inflow Outflow Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

15. Cash sales Collections on accounts receivable Borrowed funds Investment or interest income Invested cash by you or other investors Inflow It’s Cash That Counts Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

16. Purchasing inventory or raw materials Paying wages to employees Funding benefit plans (i. e. 401K’s) Paying general suppliers Paying on loans (principal and interest) Owner distributions ACH scheduled payments Outflow It’s Cash That Counts! Daily Monthly Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

17. Workers Compensation Bureau Property Taxes Estimated quarterly tax payments Sales tax remittance Withholding payments Outflow It’s Cash That Counts! Quarterly Annually Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

18. Cash Flow When the movement of money takes place A much more dynamic tool focusing on the day to day business operations Profit Revenues and expenses over a period of time (i.e. month, quarter, or year) Definition of Cash Flow and Profit Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

19. Profitable Companies Can Go Bankrupt! Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

20. Profit Statement Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

21. Profit Statement Purchase inventory on account $1,500 (Cost of Goods) Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

22. Profit Statement Purchase inventory on account $1,500 (Cost of Goods) Sell inventory on account $4,000 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

23. Profit Statement Purchase inventory on account $1,500 (Cost of Goods) Sell inventory on account $4,000 Profit $2,500 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

24. Cash Flow GAP! Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

25. Cash Flow GAP! SOLUTION Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

26. Cash Flow GAP! SOLUTION Borrow and create debt Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

27. Cash Flow GAP! SOLUTION Borrow and create debt IMPACT Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

28. Cash Flow GAP! SOLUTION Borrow and create debt IMPACT Interest expense increases Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

29. Cash Flow GAP! SOLUTION Borrow and create debt IMPACT Interest expense increases Profit decreases Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

30. Cash Flow GAP! SOLUTION Borrow and create debt IMPACT Interest expense increases Profit decreases Further strain on cash flow Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

31. Cash Flow GAP! SOLUTION Borrow and create debt IMPACT Interest expense increases Profit decreases Further strain on cash flow Reduced credit rating Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

32. Income Statement Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

33. Income Statement Revenue $4,000 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

34. Income Statement Revenue $4,000 Cost of Goods$1,500 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

35. Income Statement Revenue $4,000 Cost of Goods$1,500 Operating Expenses $1,000 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

36. Income Statement Revenue $4,000 Cost of Goods$1,500 Operating Expenses $1,000 Payroll Expenses$ 900 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

37. Income Statement Revenue $4,000 Cost of Goods$1,500 Operating Expenses $1,000 Payroll Expenses$ 900 Depreciation$ 100 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

38. Income Statement Revenue $4,000 Cost of Goods$1,500 Operating Expenses $1,000 Payroll Expenses$ 900 Depreciation$ 100 Medical Insurance$ 300 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

39. Income Statement Revenue $4,000 Cost of Goods$1,500 Operating Expenses $1,000 Payroll Expenses$ 900 Depreciation$ 100 Medical Insurance$ 300 Total Expenses - $3,800 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

40. Income Statement Revenue $4,000 Cost of Goods$1,500 Operating Expenses $1,000 Payroll Expenses$ 900 Depreciation$ 100 Medical Insurance$ 300 Total Expenses - $3,800 Profit Before Tax$ 200 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

41. Income vs. Cash Flow Revenue$4,000 -- IncomeCash Flow Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

42. Income vs. Cash Flow Revenue$4,000 -- Cost of Goods$1,500$1,500 Income Cash Flow Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

43. Income vs. Cash Flow Revenue$4,000 -- Cost of Goods$1,500$1,500 Operating Expenses $1,000$1,000 IncomeCash Flow Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

44. Income vs. Cash Flow Revenue$4,000 -- Cost of Goods$1,500$1,500 Operating Expenses $1,000$1,000 Payroll Expenses$ 900$ 900 IncomeCash Flow Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

45. Income vs. Cash Flow Revenue$4,000 -- Cost of Goods$1,500$1,500 Operating Expenses $1,000$1,000 Payroll Expenses$ 900$ 900 Depreciation$ 100 -- IncomeCash Flow Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

46. Income vs. Cash Flow Revenue$4,000 -- Cost of Goods$1,500$1,500 Operating Expenses $1,000$1,000 Payroll Expenses$ 900$ 900 Depreciation$ 100 -- Medical Insurance$ 300$ 300 IncomeCash Flow Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

47. Income vs. Cash Flow Revenue$4,000 -- Cost of Goods$1,500$1,500 Operating Expenses $1,000$1,000 Payroll Expenses$ 900$ 900 Depreciation$ 100 -- Medical Insurance$ 300$ 300 Total Expenses-$3,800 -$3,700 IncomeCash Flow Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

48. Income vs. Cash Flow Revenue$4,000 -- Cost of Goods$1,500$1,500 Operating Expenses $1,000$1,000 Payroll Expenses$ 900$ 900 Depreciation$ 100 -- Medical Insurance$ 300$ 300 Total Expenses-$3,800 -$3,700 Profit Before Tax $ 200 IncomeCash Flow Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

49. Income vs. Cash Flow Revenue$4,000 -- Cost of Goods$1,500$1,500 Operating Expenses $1,000$1,000 Payroll Expenses$ 900$ 900 Depreciation$ 100 -- Medical Insurance$ 300$ 300 Total Expenses-$3,800 -$3,700 Profit Before Tax $ 200 Cash Flow -$3,700 IncomeCash Flow Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

50. Analyzing Your Cash Flow Step 1 - Review Terms Accounts Receivable Credit Terms Credit Policy Inventory Accounts Payable Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

51. Analyzing Your Cash Flow Step 2 - Implement Internal Controls Hand sign all checks Use a payroll service Open and review monthly bank statements personally Keep personal and business accounts or expenses separate Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

52. Analyzing Your Cash Flow Step 3 – Cash Flow Projections Prepare a weekly or monthly cash flow projection (banks often want 13 weeks) Review daily cash balance after outstanding checks Calendar tracking quarterly, annual and irregular payments Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

53. Cash Flow Projections Week Beginning Date1/18/2010 Week Ending Date1/24/2010 Actual Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

54. Cash Flow Projections Week Beginning Date1/18/2010 Week Ending Date1/24/2010 Actual Beg. Line Balance$325,000 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

55. Cash Flow Projections Week Beginning Date1/18/2010 Week Ending Date1/24/2010 Actual Beg. Line Balance$325,000 Beg. Cash Balance$50,000 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

56. Cash Flow Projections Week Beginning Date1/18/2010 Week Ending Date1/24/2010 Actual Beg. Line Balance$325,000 Beg. Cash Balance$50,000 Cash Receipts A/R Receipts $1,500 Total Cash Receipts$1,500 Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

57. Cash Flow Projections Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

58. Cash Flow Projections Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

59. Cash Flow Projections Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

60. Cash Flow Projections

63. Cash Flow is King! Copyright 2010 Toledo Chamber Small Business Development Center. All Rights Reserved.

64. Ohio Small Business Development Centers Providing expertise and resources for businesses to succeed. The Small Business Development Centers provide free one-on-one counseling centered around the business planning process, including financing, market research, marketing strategies, management and cash flow analysis. Chamber membership is not required to utilize these services.

65. For More Information Charlie Chambers, Director MTSBDC at the Toledo Regional Chamber of Commerce 300 Madison Avenue, Enterprise Suite 200 Toledo, Ohio 43604-1575 419/243-8191 Charlie.Chambers@toledochamber.com