Our lesson for today:

(Module 6)
Today we will start our discussion on the
tools in managing cash, receivables, and
inventory by discussing the following
terms:

Cash
Accounts Receivables
Inventory
what is Cash?
-it is a legal tender that can be used to
exchange goods, debt, or services.
-it also includes the value of assets that
can be easily converted into cash
immediately.
 Managing Cash?

1. Separate cashiering function from

the recording or accounting function.
2. Issuing official receipts for
collections and summarizing
collections in a daily collection
report.
3. Deposit collections intact.
4. Adopt check voucher system for
payments with two signatories for
check and balance.
 Budgeting Cash?

1. Cash budget provides information

regarding the companies expected cash
receipts and disbursements over a given
period.
2. It used for identifying future funding
requirements or excess cash within a given
period.
Cash Budget
 Accounts Receivable

1. Debt owed to the firm by the customers

resulting from the sale of goods or services
Managing Accounts
Receivable
1. 5 Cs of credit evaluation.
a. Character - integrity & reputation
b. Capacity - capacity to pay or generate cash flow
c. Collateral - security pledged for payment
d. Capital - customer's financial resources
e. Condition - current economic or business conditions
 Managing Accounts
Receivable
2. Having good billing and collection system:
- sending of statement of accounts to
customers on time.
- follow-up thru phone call or any form of
gentle reminders

3. Maintain an Aging of Receivables

- to determine the amount of receivables
that are still outstanding and past due.
 Managing Inventory

-this involves the formulation and

administration of plans and policies efficiently
and satisfactorily meet production and
merchandising requirements and minimize
costs relative to inventories.
 Internal Control to
safeguard Inventory
1. Separate custodial function from recording
functions.
2. Maintain an Aging of Inventories to allow
management to identify the fast-moving
items and slow-moving items.
3. ABC Analysis or the classifying the inventories
into A (Most Important, B(Middle), C(Least
Important) Categories. Example: Diamond
4.