CASH MANAGEMENT

JAP ASENCEAGRICULTURAL TECHNICIAN I

CITY AGRICULTURE OFFICENAGA CITY

What we will discuss

I. Introduction

II. Basic Cash Flow Concepts

III. Personal Budgeting

IV. Basic Record-keeping

Reasons for Holding Cash

• Speculative motive – hold cash to take advantage of unexpected opportunities

• Precautionary motive – hold cash in case of emergencies

• Transaction motive – hold cash to pay the day-to-day bills

• Trade-off between opportunity cost of holding cash relative to the transaction cost of converting marketable securities to cash for transactions

Cash Management

• The process of forecasting, collecting, disbursing, investing, and planning for the cash a company needs to operate smoothly.

Cash Flow Uses

• It establishes how much money is needed and when it will be needed

• It helps to ensure that capital expenditure is properly controlled (e.g. the 'what if' situation)

• - It encourages efficient use of resources through budgeting and the analysis of over

• and under spending• It helps with facing facts and decision making

Benefits of Cash Management

• Increase amount and speed of cash flowing into the company

• Reduce the amount and speed of cash flowing out

• Make the most efficient use of available cash• Take advantage of money-saving

opportunities such as cash discounts

Benefits of Cash Management

• Finance seasonal business needs• Develop a sound borrowing and repayment

program• Impress lenders and investors• Reduce borrowing costs by borrowing only

when necessary• Provide funds for expansion• Plan for investing surplus cash

Basic Cash Flow Concepts

INCOME

EXPENSES

ASSETS

LIABILITIES

Paano ba yumaman?

• Mag-ipon ng pera• Matuto mag-budget ng pera. Bumili ng mga

gamit na kinakailangan lamang.• Maging maayos at matipid sa gamit.• At patuloy na isipin ang bukas. Maglaan ng

emergency savings bago magwaldas ng pera.

Iba pang paraan kung pano yumaman• Maging talentado at patuloy na pagbutihin ang

kakayanan upang umusbong ang karera.• Mag-tayo ng negosyo.• Anak ng mayaman para maraming taong

makikilala (hindi lamang ang iyong magulang at pamilya) na maaring magbigay sa’yo ng magagandang oportunidad na kumita ng pera.

• Kung hindi anak mayaman, kailangan matutong maghanap ng mga bagong kakilala upang lalong dumami ang oportunidad sa trabaho o negosyo.

• Tumaya sa lotto.• Maging tagapagmana.

PERSONAL BUDGETING

WORKSHOP

RECORDKEEPING

• Accurate and complete records enable you, and your accountant, to identify all your business assets, liabilities, income and expenses. That information, when compared to appropriate industry averages, helps you pinpoint both the strong and weak phases of your business operations.

RECORDKEEPING

• Good records are essential for the preparation of current financial statements, such as the income statement (profit and loss) and cash-flow projection. These statements, in turn, are critical for maintaining good relations with your banker. They also present a complete picture of your total business operation, which will benefit you as well.

RECORDKEEPING

Good records are critical at tax time. Poor records could cause you to underpay or overpay your taxes. In addition, good records are essential during an audit, if you hope to answer questions accurately and to the satisfaction of the auditor.

BASIC RECORDKEEPING SYSTEM

• A basic journal to record transactions (receipts, disbursements, sales, purchases, etc.)

• Accounts receivable records• Accounts payable records• Payroll records• Petty cash records• Inventory records

HINTS AND TIPS

4S APPROACHS is for...system• Spend time setting up a system which you

stick to. Allocate a regular time every week/month to deal with your financial administration, or make it a key task for a trusted employee. File your records logically - put receipts in date-marked envelopes or folders and file bank statements in order.

4S APPROACH

S is for separate• One of the biggest mistakes business owners

make is to mix their personal and professional finances. It is best to treat the business as a separate person, from which you only take income in the form of wages, dividends and in claiming back business expenses against receipts. So keep it separate - and simple.

4S APPROACH

S is for security• The fewer people involved in your record-

keeping, the fewer the errors that are likely to creep in. Make it very clear whose responsibility it is to maintain records. It is a good idea to password-protect your computer records, and only divulge the password to a small number of people.

4S APPROACH

S is for (safe) storage• Even if you choose to keep all your records on

a computer, it is vital that you keep a regular (weekly, if not nightly) electronic back-up, and a paper copy elsewhere. Store records that cannot be copied, such as chequebook stubs and paying-in books, in a fireproof box.

CASH IN, CASH OUT

References

• http://blog.invest-safely.com/2012/03/15/managing-your-personal-finances-using-cashflow-diagrams/

• http://fso.cpasitesolutions.com/premium/bs/fg/fg-

records.html#C • http://business.wales.gov.uk/finance-funding-

support/finance-and-accounts-cashflow-budgeting-debt-recovery/set-basic-record-keeping-system-0

SALAMAT PO