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    Finding Cash in Your Business
    Finding Cash in Your Business
    Finding Cash in Your Business
    Ebook159 pages2 hours

    Finding Cash in Your Business

    By Craig Alexander Orr, MBA, MSc, HND

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    About this ebook

    The idea for this book arose from a desire to clear away the mystique of cash management, make you aware of it’s importance, especially as we live through a Global Credit Crunch, and provide you with the tools to better manage cash in your business.

    Cash is the lifeblood of any business and this book provides insight, guidance and steps to help you take a look under the skin of your business to reveal just how well the cash is pumping through your company’s arteries.

    This book was written after investigating the Communications industry where a lack of proper cash management brought the demise of many a company. As I write we are in the grip of the Global Credit Crunch and it is the turn of the banks to declare their incompetence in handing your cash.

    It may be that your Finance Director has asked you to reduce headcount to conserve cash, and you are considering your options. Stop. Put a value next to these questions:
    How much did it cost to selectively recruit the best people?
    How much did it cost to train our people?
    How much will it cost to release them?
    What direct message does this send out to our customers?
    What leverage does it give to our competitors?
    What does it do for company morale?

    This book is aimed at helping you to find the Cash hidden within your business, stopping the need for a programme of corporate liposuction. Remember, 90% of people on crash diets end up putting the weight back on within a short period of time.

    This book combined with the Internet enhanced content provides you with the tools to identify areas where you can generate more cash from existing turnover, improve the way your business handles cash, create competitive differentiation, attract additional funding and secure the longevity of your business.

    Through the great depression Ford bucked the trend and grew through acquisition and expansion to emerge as a world leader in Car manufacture. In the last recession I was based in Singapore and what I saw was quite extraordinary while most countries were reducing infrastructure spend, Singapore accelerated theirs. Supply had outstripped demand; it was the best time to buy, so Singapore invested heavily to create an infrastructure that would see them emerge the downturn as a global powerhouse. The question that I have for you is “how does your company want to emerge from the global recession?” Does it just want to contract and survive or invest and emerge as a market leader?

    This book will guide you to get cash in quicker, handling it better and leveraging its power. Helping you to perform keyhole surgery on your business before major surgery is required.

    LanguageEnglish
    PublisherCraig Alexander Orr, MBA, MSc, HND
    Release dateMay 26, 2011
    ISBN9781458028082
    Finding Cash in Your Business
    Author

    Craig Alexander Orr, MBA, MSc, HND

    Craig is a Business strategist with a fresh market perspective combining technological awareness, deliverable experience with strong cost management and leadership skills. Craig likes to think of himself as the engineer who understands costs. Craig holds both an MSc from Cranfield and an executive MBA from Bradford. He has assisted Companies from start up to FTSE 100 in nearly every region of the world for over 25 years. He states “that to survive in today’s competitive marketplace companies need to focus on their core strengths, and outsource the areas that do not differentiate them from the competition.” Whilst completing his studies Craig remodeled the business plan for the company he was working for making them the most cost aware and successful business in the sector. That success propelled him into BT where he was responsible for targeting outsourcing opportunities, which now generate revenues in excess of £200m, and supports all targeted communications providers.

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      Book preview

      Finding Cash in Your Business - Craig Alexander Orr, MBA, MSc, HND

      Dedication

      I am grateful to all those who have helped develop my thinking during the researching and writing of this book.

      I am particularly grateful to my wife Karen and my daughters Emily, and Charlotte for affording me the time to write this book. I have spent too much time in the study and not enough time with you all … Daddy is now home

      Table of contents

      Preface

      Dedication

      Chapter 1 - Turnover is Vanity, Profit Sanity and Cash is reality!

      Chapter 2 - The Working Capital Cycle

      Chapter 3 - WCC within Your Market

      Chapter 4 - WCC within Your Company

      Chapter 5 - Your Company’s health check

      Chapter 6 - Your Company’s Internal Accounts

      Chapter 7 - Cash contribution by product

      Chapter 8 - Mapping out Cash usage by product

      Chapter 9 - Credit control

      Chapter 10 - Cash in Your Business

      Glossary

      Top ten tips

      Credit crunch: a sudden reduction in the general availability of loans/credit, or a sudden increase in the cost of obtaining loans from the bank.

      Chapter 1

      Turnover is Vanity, Profit Sanity and Cash is reality!

      Every Business needs to come to the realisation that even whilst Sales and Profits continue to soar creating demand for expansion, the absence of Cash just once could dismantle your business like someone blowing on a house of cards.

      Finding Money in Unusual places

      If I find a coin on the floor in my business how much is it worth? Well says the External Auditor that depends on where you found it. If you found it in the treasury before it was used to make any payments it is worth the face value minus any bank interest. If you found on the shop floor it is worth the face value minus the commission and the costs to manufacture. If you found it in the accounts department after the creditors and debtors then it is worth its weight in Gold. Oh, and if you found it anywhere else its mine!

      A coin found in the cash flow cycle is worth roughly 3 times its value in Sales.

      If a business has a profit margin of 33% then every £1 found is equivalent to a new sales value of £3, assuming that the new sale is paid for promptly.

      Top tip: Don’t wait for a business recovery before trying to improve the cash flow

      In recognition that an appreciation of all things financial is both important and impossible, this book has been written for you. Yes. If you have picked up this book it means only one thing you are interested in improving your company’s cash flow, and this book has you in mind. Each chapter of the book starts with a keyword or phrase definition and includes a memory enhancing top tip; both are included in a summary guide at the back of the book. Over the course of this book you will be shown how to prioritise your investigations into where cash seepages are most likely to occur, and be provide with the tools to improve the cash flow cycle within your business.

      Cash cannot bring you happiness but it sure makes a good down payment.

      The banks are blaming the growing shortage of credit on the fear that many more loans will go bad. There has been a surge in the number of borrowers unable to keep up repayments. Lending is drying up as banks re-capitalise. Banks are radically cutting back on the risks they are willing to take. Is it any wonder that companies are struggling to raise funding in the paralysed money market?

      The good news is that growing your business need not be on the back of a bank loan, improving your cash flows will provide you with cash to invest in growth.

      Wacky places to look for the cash

      Lets get started with our treasure hunt. The Cash Flow Formula is a structured approach to looking for cash in your business. It employs a number of business management techniques that systematically help you uncover cash and inject it back into your business.

      The figure below is a graphical view of the Cash Flow Formula. Used correctly it will help you to pinpoint, analyse, and prioritise finding additional cash within your business.

      The 7 investigative steps are:

      Competitors

      Cash Flow by Company

      Business Model

      Internal Accounts

      Product contribution

      Cash Flow by Product/Service

      Credit control.

      So switch on your metal detector and lets get going.

      Don’t worry if you don’t understand all of the terms used in the steps above they will be explained in detail as you go through the book using case study examples.

      Please note: This book is kept relevant by using public domain information that can be replicated, and where data of a more sensitive nature is used it has been massaged to provide insight into the techniques whilst protecting the innocent and guilty alike.

      The Figure below shows the finely balanced structure representing the building blocks of the cash flow cycle within your organisation. Each building block has the potential to release cash back into the business, making the hard earned cash work harder for you in achieving your business objectives. These building blocks will be investigated in detail in chapter 4 of this book.

      Conclusion

      The key objective of this book is to provide you with a structured framework that you can use to find and release cash in your business. Working through the Cash Flow Formula’s 7 steps you will gain new insight into how Cash is managed within your business, and enable you to make recommendations on how to better handle cash flows. Our objective is to make the Working Capital Cycle (WCC) shorter and ensure cash is constantly generating new revenue.

      Over the course of this book you will identify areas of cash seepage, begin to find money you never new you had, extract more profit from existing turnover, attract new investment, and off

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