Managing Cash Flow

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Short-Term Planning 85 Segment mission determines segment functions, and from these plans, budgets and programs are derived. This in turn leads to implementation, review, and replanning. The combination of bottom-up development and top-down direction and review is the foundation for the effectiveness of short-term planning procedures. It brings about the maximum involvement of managers, supervisors, and operational personnel in the development of operating goals, objectives, and detail plans; while at the same time ensures that these plans will be compatible with overall organization mission and strategic plans as well as shorter-term goals and objectives. Effective short-term planning necessitates participative management. This does not necessarily mean a complete change in the management system, but it does place more emphasis on certain management techniques such as getting things done through other people. Managers must delegate in order to derive the greatest benefit from the planning system. They must give their employees freedom to devise their own methods for attaining their goals and objectives. This carries with it, of course, the freedom to fail—frightening to some, but a major learning process for subordinates. SHORT-TERM PLANNING PROVIDES THE FRAMEWORK FOR IMPLEMENTING THE LONG-TERM PLAN. Short-Term Operating Plan Short-term planning is the process whereby top management, operating management, and others in the organization jointly identify common goals and objectives, define each individual’s major areas of responsibility in terms of results expected, and use these measures as guides to operating each organizational unit and assessing the contribution of each staff member. Short-term planning also permits management at all levels of the organization to concentrate on those matters requiring attention and to devote only minimal effort to those activities that are running smoothly. This concept is known popularly as management by exception. The process for developing, approving, and implementing short-term planning activities is depicted in Exhibit 3.8. Shown on this graphic are the roles of the CEO, functional managers, and administrative (financial) personnel in the process. Note that the process is based on a cooperative relationship between top and functional management, ensuring an integrated plan for all levels of the organization. As a result, all members of the organization are working toward the same targets.
86 Planning and Budgeting CEO FUNCTIONAL SEGMENTS FINANCIAL ADMINISTRATIVE stategy guidelines issues Resource limits identified Business plans drafted not ok Compliance consistency review not ok Consolidation Overall review and approval not ok CFO/Budget Committee Review not ok Board of Directors approval IMPLEMENTATION Evaluation Review and replanning Exhibit 3.8 Short-Term Planning Process The general steps normally required in the short-term planning process are shown in Exhibit 3.9, and can be discussed more fully as follows: 1. Planning. Based on corporate goals and objectives, each segment will state its mission (its reason for existence) and its major functions; will analyze its strengths, weaknesses, opportunities, and threats (SWOT analysis); and will develop its goals and objectives (specific goals to be attained). 2. Detail plans and programming. Once management agrees upon the segment goals and objectives, segment staff will develop alternatives as to how they will accomplish their objectives. Through a priority-setting process,
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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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Page 46 and 47: Using the Balance Sheet 37 Change 2
Page 48 and 49: Cash Receipts 39 which could be use
Page 50 and 51: Cash Receipts 41 Sales per Day Avg.
Page 52 and 53: Cash Receipts 43 happening—would
Page 54 and 55: Cash Receipts 45 Invoicing The star
Page 56 and 57: Cash Receipts 47 earmark those for
Page 58 and 59: Cash Receipts 49 We can adjust the
Page 60 and 61: Cash Receipts 51 Finance Charges CA
Page 62 and 63: Cash Receipts 53 Standard sized env
Page 64 and 65: Cash Receipts 55 PAC Issuing Instit
Page 66 and 67: Cash Receipts 57 duction of about $
Page 68 and 69: Cash Disbursements 59 Sequence of A
Page 70 and 71: Cash Disbursements 61 determine whe
Page 72 and 73: Cash Disbursements 63 this system t
Page 74 and 75: Cash Disbursements 65 Estimated Fun
Page 76 and 77: Conclusion 67 Local Office #1 Sales
Page 78 and 79: CHAPTER 3 Planning and Budgeting PL
Page 80 and 81: Relationship Between Planning and B
Page 82 and 83: Relationship Between Planning and B
Page 84 and 85: Strategies for Competitive Advantag
Page 86 and 87: Strategic Planning Process 77 EXTER
Page 88 and 89: Strategic Planning Process 79 Once
Page 90 and 91: Short-Term Planning 81 D. PLANNING
Page 92 and 93: Short-Term Planning 83 TOP MANAGEME
Page 96 and 97: Short-Term Planning 87 Planning mis
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Page 100 and 101: Short-Term Planning 91 achievements
Page 102 and 103: Short-Term Planning 93 Credit/Colle
Page 104 and 105: CHAPTER 4 Analyzing the Sales Funct
Page 106 and 107: Purpose of the Sales Function 97 a
Page 108 and 109: Purpose of the Sales Function 99 1.
Page 110 and 111: Purpose of the Sales Function 101 L
Page 112 and 113: Purpose of the Sales Function 103 b
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Page 120 and 121: Purpose of the Sales Function 111 S
Page 122 and 123: Purpose of the Sales Function 113 1
Page 124 and 125: Purpose of the Sales Function 115 t
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
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Benchmarking Strategies 135 so that
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Benchmarking Strategies 137 To this
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Benchmarking Strategies 139 • Wha
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Benchmarking Strategies 141 increas
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Benchmarking Strategies 143 no ince
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Benchmarking Strategies 145 to eval
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Benchmarking Strategies 147 Accordi
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Benchmarking Strategies 149 Number
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Benchmarking Strategies 151 • Pur
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Activity Based Costing Principles 1
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Conclusion 175 the costs to particu
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Looking at the Accounting Function
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Choosing What to Analyze 179 expert
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Choosing What to Analyze 181 1. Def
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Identifying Goals and Basic Busines
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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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