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And finance, as we know, is key to sustaining a business, both for th eir survival and for its development, competitiveness and sustainability. Genera lly the most common questions about HOW to make a financial management to be eff icient and serve as a basic tool for decision making in day-to-day manager. A to ol that makes this work is known as Cash Flow. This is a control that assists in visualization and understanding of financial operations in a predetermined peri od. Its great utility is to allow viewing of surpluses or shortages of cash even before they occur, enabling entrepreneurs to better plan their actions. In vrda de every action performed by a company boils down to entry or exit of money! It is in this game comes-and-out that the cash flow shows its importance as it help s us to see well ahead when it goes missing or left over appeal. The times of ti ght credit, high interest rates, falling revenues, among others, require the ent repreneur financial management more efficient. Thus it becomes necessary to use financial controls that enable knowledge more efficiently the resources box. 1 So what comes to be Cash Flow? It is an instrument of control that aims to help the entrepreneur make decisions about the company's financial position. It consists of a management report that tells all movements of cash in (out) when considering a fixed period, which may be a week, a month etc.. 2 What is the Report of Cash Flow? • Plan and monitor incoming and outgoing cash during a period of time. • Assist the manager to make decisions in advance about the lack or surplus of money in t he company. • Check that the company is working with financial slack or tightnes s in the study period. • Ensure that financial resources are sufficient to run t he business in a certain period or if there is a need to raise capital. • Plan b etter policies on time limits for payments and receipts. • Evaluate the ability to pay before making commitments • Know in advance (strategic planning) large nu mbers of business and its real importance in the period considered. • Evaluate w hether the collection of sales is enough to cover spending commitments and proje cted over the period. • Evaluate the best time to make the replacement stock in relation to the payment terms and cash availability. • Evaluate the most favorab le moment to make promotions to improve the business case. 3 Report Template for Cash Flow MONTH / YEAR C aix Beginning Balance of Cash Post-dated Checks Duplicates Receiv able Credit Card Other Receipts Total Entries on Sales Tax Payments to Suppliers Pro Labore Wages Benefits Water Light Charges Telephone Banking Advertising and Marketing Expenses Selling Expenses Commissions Payment of Fees Accounting Serv ices Vehicle Fuel Costs Office Supplies Equipment Purchase Payment Financing Oth er Expenses Outputs Total Operating Balance Ending Balance WEEK 1 WEEK 2 WEEK 3 WEEK 4 WEEK 5 TOTAL Estimated Estimated Achieved Achieved Planned Achieved Plann ed Achieved Planned Achieved Planned Achieved 4 In the previous report was adopted as a model the weekly period, just as a demon stration, as usual, and the daily recommended! Beginning Balance: is the constan t value in the box at the beginning of the period for establishing the flow. It is composed of money in the "Drawer" plus bank balances available for withdrawal
. Inputs Box: correspond to sales in sight, as well as other receipts, such as d uplicates, postdated checks, invoices, credit card etc.., Available as "cash" on its date. Cash outflows: represent payments to vendors, prólabore (removal of s hareholders), rents, taxes, payroll, water, electricity, telephone and others, i ncluding some described in our model. Operating Balance: represents the value ob tained from inputs less cash outflows in the respective date. Possible to evalua te how they behave their receipts and spending time to time without the influenc e of previous cash balances. Closing Balance of Cash: represents the value obtai ned from the sum of the Initial Balance with the Operating Balance. Lets see the actual surplus or shortage of money in your business over the period and become s the Beginning Balance of the next period. 5 How do I interpret this report? Suppose that the first working day of the month as entries have receipts amounti ng to $ 1,000.00 in cash, $ 500.00 in post-dated checks with pay for two days, p lus $ 500.00 on card Credit also for two days. In this situation we have as tota l entries on the day considered only $ 1,000.00 for the cash value recorded by s ales. The remaining amounts should be placed as entries on the dates that turn i nto money, ie the date of clearing of post-dated checks and provision of credit card provider. Suppose the outputs of the same day Bring to a total of $ 500.00 and that our initial available balance is $ - 500.00 on account of a bank. Our o perating balance is $ 1000.00 regarding entries, minus $ 500.00 concerning payme nts or withdrawals, totaling $ 500.00, that is, received more than we paid! Howe ver our total balance (cash available) is R $ -500.00 (hole in the bank account) plus $ 500.00 for the operating balance, which would total $ 0.00, that is, beg in the next working day without any initial balance, going to depend exclusively on the turnover in cash today to pay off the exits with suppliers that will hap pen now! You can notice that the last line of that report, a well-run company fi nancially, should always produce positive results, indicating that there is avai lable cash. The report of Cash Flow that day would look like this: 6 OUTUB RO/2003 Opening Balance of Cash aix C Post-dated Checks Duplicates Receiva ble Credit Other Total Receipts Journal Sales Tax Payments to Suppliers Pro Labo re Wages Benefits Water Light Phone Charges DAY 1 Scheduled Held -500 -500 1000.00 1000.00 500.00 0.00 Estimated DAY 2 0.00 Realized 500.00 1000.00 1000.00 1000.00 0.00 1300.00 50.00 50.00 100.00 50.00 50.00 100.00 Advertising and Marketing Expenses B Ancaria Expenses Selling Commissions Fees P
ayment Financial Services Vehicle Fuel Costs for Office Supplies Equipment Purch ase Payment Financing Other Expenses Outputs Total 100.00 500.00 500.00 10.00 13 00.00 0 00 150.00 50.00 50.00 150.00 Oper ational Balance Ending Balance 500.00 0.00 500.00 0.00 -300.00 -300.00 0.00 0.00 7 Why are there speakers planned and carried out? One of the most important factors for success in running a business is appropria te PLANNING. Therefore, financial management should be carefully planned, execut ed, monitored and evaluated. This is only possible if we set goals (goals, inten tions) that guide us to avoid "unexpected surprises." If we start to project rec eipts and payments based on our previous knowledge and future expectations as to what we expect from the market, we can prepare ourselves to cope with difficult ies before they occur. So, working with the predicted values and compare them wi th the completed (happened on the day), and show future shortages or surpluses o f cash, allows early decisions on increased purchases, sales, cost rationalizati on, right time to invest and even about the possibility of withdrawing most prolabor without "bleed" the company. How to begin to assemble and manage the cash flow report? • Be systematic! Make a habit of recording each and every financial move occurre d and occur in your company on a certain date. Computer technology can help you much, however, the lack of computerization should not be an excuse not to manual ly register these movements. • In the first hour of your day's work, check, anal yze and record cash balance in cash and bank balances. Much attention should be paid to bank balances, it is your money managed by third parties, along with the impact fees, rates and charges, there may be a bounced check that you considere d as cash account! • All values recorded in the Cash Flow should be realistic. F or this it is necessary to maintain the entrances and exits always updated. • Wh en launching exits, remember that the cost of electricity, water and sewage, mun icipal taxes, state and federal, as well as hire8 • • • • • • éis, wages, services continued by third parties, must date to be paid. Otherwise there will be incidence of fines and interest. So throw those expenses as predi ctions and compare them with those made on the date of occurrence. Review the av ailable cash, which the most suitable time to make personal withdrawals (pro-lab or). The column always shows the aggregation degree of accuracy in forecasting. The more accurate is your business knowledge, plus the expected be close to done
. If your business can be influenced by seasons (high and low season), has a lot of attention with planning your expenses in order to avoid problems of inadequa te housing. When cash flow becomes negative for long periods in a row, indicatin g that its working capital is compromised! In this case it is good to think abou t promoting cash sales discounts, giving more emphasis to products stopped in it s stock. Forecasting Cash Flow lets you know in advance how much financial resou rces you need and can be generated by the sales and receipts. If it is not enoug h, will allow you to negotiate alternatives to raise capital with more discretio n and security and a better chance of negotiating fees. Remember that a cashier at the appropriate level avoids surprises when defaults occur in your company. R ealized how much utility a simple and practical tool can offer your business? No w get to work! DIY Cash Flow and watch the day-to-day finances of your business the right way for making decisions. 9
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