Managing Cash Flow

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Benchmarking Strategies 137 To this day, many business organizations still function in this manner, with the purpose for the organizational hierarchy being to police and control those reporting to them to make sure they do their jobs. The structure is also set up with the intrinsic message that those in a higher position on the chart know more. Hence, much of their time is spent on reviewing the work of those under them and then having those under them redo it so it looks more like what the manager would do. If these policing and control, review and redo processes exist, that makes many supervisors and managers superfluous (non-value-added) organizational overhead, and often more hindrance than help. If these non-value-added processes are eliminated, management is strictly limited to necessities, and the organization creates an atmosphere that encourages the motivation of self-disciplined employee behavior. Then many of these layers of unnecessary organization and costs could be eliminated. A look at Exhibit 5.5 may raise many questions and reveal areas for review related to making this organization more effective and efficient and, as a result, more economical. The following are areas that may be considered: • The need for vice-presidents and their real functions • Directors’ level and their purposes • The number of functions reporting to the vice president of operations and the related control structure • The number of department levels and breakdowns in the manufacturing and finance areas • Which departments or units are necessary, could be combined, could be eliminated, could be provided more economically in another manner, and so on • Reporting relationships throughout the organization, such as between the president and vice presidents, the vice presidents and directors/department heads, and so on • The degree of value-added management/supervision, as opposed to policing and control, review and redo procedures • The ability of personnel in general to perform their functions in a motivated self-disciplined mode without the need for close supervision or management • The purpose of support services for each branch and their related functions Exhibit 5.6 shows a further breakdown of the functional areas reporting to the vice president of operations. A review of this organizational chart, with particular attention to the purchasing function, reveals some areas for further review, such as: • Why does the purchasing department report to the vice president of operations?
138 Cost Reduction Analysis Procedures Vice President Operations Market Analyst Administrative Analyst Clerk Stenographer Clerk Stenographer (1) Staff Services Purchasing Inspections Inventory Control Warehouse Purchasing Supervisor Standard Specifications Chief Inspector Inventory Supervisor Warehouse Manager Buyer II (7) Buyer I (4) Clerk Stenographer Clerical Supervisor Clerk Typist (2) Standard Specifications Supervisor Procurement Technician (2) Management Trainee (2) Clerk Stenographer Clerk Inspector (3) Clerk Typist Inventory Control Supvsr (2) Inventory Control Clerk (4) Clerical Supervisor Clerk Typist (2) Stores Manager (2) Stores Supvsr (2) Equipment Operator (3) Storesman (2) Stock Handler Semi-skilled Labor (2) Exhibit 5.6 Further Breakdown of the Functional Areas Reporting to the Vice President of Operations • What are the functions, responsibilities, and authority of staff functions such as market analyst and administrative analyst? • Why are two clerk stenographers reporting directly to the vice president of operations? What do they do? • What is the function and authority of the purchasing supervisor? (Note: This position was listed as Director of Purchasing on the top-level organization chart). • What are the buyers’ functions and how are they used within the purchasing department? • What is the difference between a Buyer II and a Buyer I? • Are all the buyers necessary based on division of the workload? • What is the function of the clerk stenographer and how does it differ from those of the clerical supervisor and clerk typists? • What does the clerical supervisor do, and is supervision of the two clerk typists necessary? • What are the functions of the two clerk typists, and is the workload appropriate?
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Managing Cash Flow An Operational F
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Contents About the Authors Acknowle
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ABOUT THE AUTHORS Rob Reider, CPA,
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About the Authors vii • Cash Flow
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INTRODUCTION CASH IS KING! Cash ava
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Why the Business Exists 3 • Custo
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Some Basic Business Principles 5
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Purpose of this Book 7 • Are sale
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CHAPTER 1 Understanding Cash Manage
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Understanding Cash Management 11 qu
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Cash Flow Basics 13 minimizing the
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Cash Flow Basics 15 FROM CASH TO CA
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Cash Flow Basics 17 • There needs
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Cash Flow Basics 19 The main reason
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History, the Fed, and Float 21 HIST
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History, the Fed, and Float 23 •
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History, the Fed, and Float 25 vers
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History, the Fed, and Float 27 Rece
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Bank Issues and Concerns 29 • Che
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Bank Issues and Concerns 31 or neve
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Conclusion 33 affects its relations
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CHAPTER 2 Managing Cash Flow—Rece
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Using the Balance Sheet 37 Change 2
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Cash Receipts 39 which could be use
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Cash Receipts 41 Sales per Day Avg.
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Cash Receipts 43 happening—would
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Cash Receipts 45 Invoicing The star
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Cash Receipts 47 earmark those for
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Cash Receipts 49 We can adjust the
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Cash Receipts 51 Finance Charges CA
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Cash Receipts 53 Standard sized env
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Cash Receipts 55 PAC Issuing Instit
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Cash Receipts 57 duction of about $
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Cash Disbursements 59 Sequence of A
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Cash Disbursements 61 determine whe
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Cash Disbursements 63 this system t
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Cash Disbursements 65 Estimated Fun
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Conclusion 67 Local Office #1 Sales
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CHAPTER 3 Planning and Budgeting PL
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Relationship Between Planning and B
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Relationship Between Planning and B
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Strategies for Competitive Advantag
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Strategic Planning Process 77 EXTER
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Strategic Planning Process 79 Once
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Short-Term Planning 81 D. PLANNING
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Short-Term Planning 83 TOP MANAGEME
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Short-Term Planning 85 Segment miss
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Page 100 and 101: Short-Term Planning 91 achievements
Page 102 and 103: Short-Term Planning 93 Credit/Colle
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Page 126 and 127: Purpose of the Sales Function 117 1
Page 128 and 129: Purpose of the Sales Function 119 r
Page 132 and 133: CHAPTER 5 Cost Reduction Analysis P
Page 134 and 135: Benchmarking Strategies 125 BENCHMA
Page 136 and 137: Benchmarking Strategies 127 determi
Page 138 and 139: Benchmarking Strategies 129 The ben
Page 140 and 141: Benchmarking Strategies 131 Product
Page 142 and 143: Benchmarking Strategies 133 Sales F
Page 144 and 145: Benchmarking Strategies 135 so that
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Page 150 and 151: Benchmarking Strategies 141 increas
Page 152 and 153: Benchmarking Strategies 143 no ince
Page 154 and 155: Benchmarking Strategies 145 to eval
Page 156 and 157: Benchmarking Strategies 147 Accordi
Page 158 and 159: Benchmarking Strategies 149 Number
Page 160 and 161: Benchmarking Strategies 151 • Pur
Page 162 and 163: Activity Based Costing Principles 1
Page 184 and 185: Conclusion 175 the costs to particu
Page 186 and 187: Looking at the Accounting Function
Page 188 and 189: Choosing What to Analyze 179 expert
Page 190 and 191: Choosing What to Analyze 181 1. Def
Page 192 and 193: Identifying Goals and Basic Busines
Page 194 and 195: Financial Reporting 185 2. Accounts
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Financial Reporting 187 ASSETS Cash
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Compiling the Data 189 1. Organizat
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Compiling the Data 191 h. What is y
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Analyzing the Data 193 1. Organizat
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Analyzing the Data 195 e. Do you au
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Analyzing the Data 197 c. Can you p
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Organizational Issues 199 Controlle
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Budget Analysis 201 Budget Actual C
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Analysis of Functional Costs 203
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Analysis of Functional Costs 205 La
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Analysis of Accounting Operations 2
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Analysis of Accounting Operations 2
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Activity-Based Costing Applications
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Developing Recommendations 213 •
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Specific Recommendations 215 7. Per
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Specific Recommendations 217 ager a
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Specific Recommendations 219 figure
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Specific Recommendations 221 • Gr
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Specific Recommendations 223 • Sa
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Specific Recommendations 225 Curren
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Specific Recommendations 229 Based
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Organization Recommendations 233
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Other Areas for Review 235 • The
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Conclusion 237 must change its beli
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CHAPTER 7 Investing, Financing, and
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Investing Excess Cash 241 puts upwa
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Investing Excess Cash 243 Instrumen
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Investing Excess Cash 245 • Depre
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Investing Excess Cash 247 Cash Outf
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Investing Excess Cash 249 Investmen
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Borrowing for Cash Shortfalls 251 t
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Borrowing for Cash Shortfalls 253 m
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Borrowing for Cash Shortfalls 255 t
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Borrowing for Cash Shortfalls 257 r
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Borrowing for Cash Shortfalls 259 I
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Borrowing for Cash Shortfalls 261 A
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CHAPTER 8 Planning Cash Flow MANAGI
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Cash Flow Planning 265 or more futu
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Cash Flow Planning 267 Cash Budgeti
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Cash Flow Planning 269 ACTUAL PROJE
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Cash Flow Planning 275 THE MORE VOL
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Managing Cash Balances 277 on its u
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Cash Planning Approaches 279 Dealin
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Cash Planning Approaches 281 Cash f
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Conclusion 283 Cash flows from oper
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CHAPTER 9 Controlling and Analyzing
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Cash Flow Projections: Methodology
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Cash Flow Reporting and Controls 29
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Interpretation and Analysis of Cash
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AFTERWORD The materials in this boo
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APPENDIX A Case Study: Managing Cas
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Jack B. Nimble Company 327 ($$ in 0
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Jack B. Nimble Company 329 ABC Mach
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Jan Feb Mar Apr May Jun Jul Aug Sep
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Cash Forecast Information 333 him,
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Jan Feb Mar Apr May Jun Jul Aug Sep
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Jack B. Nimble Company Suggested So
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Jack B. Nimble Company Suggested So
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APPENDIX B Cash Conservation Checkl
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Liabilities and Equity 343 ASSETS Y
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Income and Expenses 345 INCOME AND
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Index A ABC, see Activity based cos
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Index 349 traditional, 159-161 unit
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Index 351 P Payables, 16, 59 Paymen
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Managing Cash Flow

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