The money pumping through a business, from cash register to bank account to supplier....keeps
every company alive. It is a form of energy.

How a business owner manages this energy can determine the success or failure of the
operation.

Business owners must manage their company's cash so bills can be paid on time and extra
dollars can be spent on new equipment, put into increased inventory, or invested.

Ideally, each dollar should be either AT WORK or IN TRANSIT at the close of the business day.

COMMON MISCONCEPTIONS AND MANAGEMENT MISTAKES

CONFUSING PAPER PROFITS WITH CASH FLOW

FAILING TO BUDGET FOR CAPITAL EXPENDITURES

MISTAKING ACCOUNTS RECEIVABLE FOR CASH

KEEPING LARGE SUPPLIES OF CASH ON HAND "Just in Case"

PLAN ADEQUATE CASH SUPPLY

CONTROL CASH FLOW

INVEST SURPLUS CASH

Inflows: Revenues from Sales, Loan Proceeds, Owners Capital, Injections

Outflows: Cost of Sales, Operating Expenses, Loan Repayments, Income Taxes
and Distribution to Owners.

To Make Management Decisions

Help Communicate with Personnel and Suppliers

Reveal Need for Changes in Spending Habits

Illuustrate Type of Financing, and When It is Needed

To Develop a Realistic Business Plan

Estimate Financial Needs

Identify Firms' Weaknesses/Strengths

Develop a Timetable for Success

Measure Results Againts Goals

(*Also known as Cash Projections, Cash Forecasting, Cash Plan, and Cash Position Forecast)

A carefully developed CASH BUDGET* is one of the best toots for determining the proper amount of

cash needed to keep a company operating smoothly.

To Acquire a Loan

Describe Company financial status and expected results of the loan

Justify loan amount requested and the particular type required

Communicate with lenders and creditors and;

Obtain capital for new business

Business and Technical
Assistance Center

375 South Carbon Avenue

Price, UT 84501

(435) 637-5032 ext. 408

THREE MAJOR ELEMENTS OF EFFECTIVE CASH MANAGEMENT

CASH FLOWS FALL INTO TWO CATEGORIES: INFLOWS AND OUTFLOWS

CASH FLOW BUDGETING

Cash Flow Forecasting Can Help...........

The following download is an Excel document. You must have Excel in order to open it.