“Never take your eyes off the cash flow because it’s the lifeblood of business.” – Sir Richard Branson
“Never take your eyes off the cash flow because it’s the lifeblood of business.” – Sir Richard Branson
Process Steet’s Cash Management Process is a guide to aid the management of your business’s cash flow. As a small business owner, you can use this template on a quarterly basis, to continually assess how you can improve your business’s cash flow to ensure business success.
Process street has condensed the cash management process into the following steps:
Cash management as a procedure lays its roots from two seemingly unrelated methods of finance; owner financing and factoring.
Owner financing as a process involves the acceptance of a signed document stating the sum of the delivered product or service.
Factoring is the sending of an invoice to collect money at its due date.
Take both owner financing, and factoring, and provide time for the evolution and change of natural business cycles, and you have the emergent of cash management as a financial procedure.
As an area of finance, cash management is very broad, covering cash collection, handling, and usage. Process Steet’s Cash Management Process considers cash management in the sense of ensuring that your business has enough cash.
The aim of Process Steet’s Cash Management Process is to ensure cash flow running into your business is greater than the cash flowing out from your business.
82% of small businesses fail due to poor cash flow. It is clear that successful cash flow management is essential for your business success. Cash flow management has even been termed as the most important job when it comes to running a business.
In this template, you will be presented with specialized questions given as a form field. Different form fields are used, such as subtasks, dropdown menus, short answers, long answers, and weblinks.
You can populate each form field with your own specific data. This data is compiled for you to easily set your own targets. Using our dynamic due date feature, the targets can be reviewed.
In addition, our stop task feature has been used to enforce task order when needed, and our conditional logic task has been used to guide you through the correct process path specific for your entered data.
In this Cash Management Process, you will be presented with the following form fields, which you are required to populate with your own specific data. More information is provided for each form field via linkage to our help pages:
To begin the Cash Management Process, enter the required details into the form fields below.
The first step of Process Street‘s Cash Management Process is to ensure you have the appropriate credit control procedure in place.
Consult your current credit control procedure and ensure the following steps are being carried out.
Check off each step if you can confirm your credit control procedure includes such as step.
You can state whether each step within our recommended credit control process is met by your own credit control procedure using the drop-down menu provided.
You can then add notes for each step, indicating successes and areas for improvement.
Carrying out custody calls eliminates the possibility of a customer telling you they never received an invoice after the due date.
If you have spent a lot of time chasing payment, then the most cost and time effective way would then to outsource the payment chasing.
Based on the previously outlined criteria for the creation of a good credit control procedure, you can set your own personal targets to achieve the best credit control procedure for your business.
The dropdown menu represents a conditional step in this process. By selecting ‘Yes’ or ‘No’, you will be directed to the relevant steps in the Cash Management Process.
This task uses our dynamic due date feature. Once a date has been set to review the targets, you will be reminded a day before this date in regards to the upcoming due task.
The notes you made in regards to each step of the credit control process have been summarized in the below.
Areas for improvement should have been highlighted, and these have been mentioned below as a reminder.
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You can email the set targets to relevant personnel using our email widget below.
See Process Street‘s Financial Planning Process (link) and Financial Plan Template for information on how to calculate the most essential financial forecasts.
The number of times you conduct financial forecasts is dependent on the length of your sale cycle and the size of your business.
Small businesses will be required to conduct/evaluate financial forecasts more frequently. Small businesses are most likely to evaluate forecasts on a quarterly basis.
In addition, if your product/service cycle is a long cycle, the evaluation of your financial forecasts will not be needed as frequently as if your product/service provided has a short cycle.
Financial forecasts can be conducted annually, quarterly, monthly or biweekly.
Refer to your financial forecasts, and ensure that you have the following information:
Please note companies that have not been operational for too long have sale goals rather than sale forecasts. Sale forecasts are determined based on an organization’s previous sales, whereas sale goals can be set with little past data available to set a forecast.
You can use your financial forecasts to help you understand the cash you are likely to have, and when, during the running of your business over a set time.
Financial forecasts should be as realistic as possible and should closely match reality.
You can use our file upload widget to upload relevant documentation detailing the financial forecasts made.
Alternatively, you can use your web link form field to provide the URL of online documentation, such as Google excel.
The dropdown menu represents a conditional step in this process. By selecting ‘Yes’ or ‘No’, you will be directed to the relevant steps in the Cash Management Process.
This task uses our dynamic due date feature. Once a date has been set to review the targets, you will be reminded a day before this date in regards to the upcoming due task..
You can email the set targets to relevant personnel using our email widget below.
‘Having long-lasting, trusted relationships with dedicated suppliers should be a primary goal of any business that strives to succeed in the market’
To obtain good supplier terms, it is vital to set up good supplier relationships. Good supplier relationships can be obtained by implementing a successful Supplier Relationship Management plan.
Based on the previously outlined criteria for the creation of a good Supplier Relationship Management strategy, you can set your own personal targets to achieve the best supplier relationships.
The dropdown menu represents a conditional step in this process. By selecting ‘Yes’ or ‘No’, you will be directed to the relevant steps in the Cash Management Process.
This task uses our dynamic due date feature. Once a date has been set to review the targets, you will be reminded a day before this date in regards to the upcoming due task.
You can email the set targets to relevant personnel using our email widget below.
If your business provides a product for sale, it is important to ensure you have the right level of stock to satisfy the customer.
Running stocks too low will lose business, but running stocks to high will cost you money. The estimated cost of holding stock is 10-30% of the stock’s value.
Costs are incurred through stock storage, insurance, keeping accurate records and controlling stock for theft avoidance.
A right balance is needed for the amount of stock you own.
You firstly need to review your current stock levels and stock sale volumes.
Create an action plan to move both slow moving stock items and items in excess.
For example, you can sell the stock items at a discounted price below the items price. The money obtained from doing this can then be used to buy new stock.
Slow-moving stock items could be donated to charity. Supporting a charity can support a business by increasing employee morale, provide marketable benefits, providing tax benefits and by helping the community.
See Process Street’s Financial Plan Template to determine how to calculate gross margin.
We recommend you have a procedure in place to keep track of individual stock items. Accounting or stock control software can do this.
Your Financial Policies and your Procedures Manual should include a policy to track the stock movement. This will help you record the stock and its movement to aid the stock re-ordering process.
The next action to take to control your stock is to implement a stock control policy.
With a large difference between the stock records and the physical count, continue the physical count more often until the cause of difference has been established.
When reviewing your current sale policies, the final dropdown form field provided is a conditional step in this process. Selecting ‘Yes’ or ‘No’ will direct you to the relevant stage in the Financial Plan Template.
Review your current sale policies. Ensure they are as required.
The ‘Stock Turn Rate‘ is a calculation you can use to check if your stock planning is effective.
A low stock turn rate means the movement of your stock is slow, which leads to higher holding costs and old stock.
A high stock turn rate could mean you do not have enough stock on hand to supply the customer needs.
Follow the steps below to calculate the stock turn rate:
The Cost Of Goods Sold (COGS) refers to the costs directly attributable to the production of goods sold in a company.
The Stock On Hand is the number of goods, for example, finished products, a company has available at a given time.
Manufacturing stock turn rate usually varies from 4 to 21 times. You can review your stock turn rates for each product to determine whether you want to order more stock of the product in, or order less.
Based on the previously outlined criteria for the creation of good stock control measures, you can set your own personal targets to achieve the best stock control measures for your business.
The dropdown menu represents a conditional step in this process. By selecting ‘Yes’ or ‘No’, you will be directed to the relevant steps in the Cash Management Process.
This task uses our dynamic due date feature. Once a date has been set to review the targets, you will be reminded a day before this date in regards to the upcoming due task..
You set the following targets to improve your stock control measured:
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{{form.Summarize_the_reasons_as_to_why_your_sale_policies_are_not_as_required.}}
{{form.Based_on_your_stock_turn_rates,_summarize_areas_for_improvement_to_reduce_or_increase_specific_stock_levels.}}
You can email the set targets to relevant personnel using our email widget below.
Controlling your business expenditure must begin with ensuring you have a well-developed budget developed and managed.
See Process Street‘s Budget Process
Even the smallest reduction in business expenses can have profound benefits to your companies success.
It is important to take a step back and look at your current business expenses to assess what you are doing well and what can be improved upon.
See Process Street‘s Environmental Accounting Internal Audit to reduce your environmental costs.
There is a fine line between reaping positive effects of cost-cutting employee benefits and experiencing diminishing returns if benefits are cut too much employee morale is reduced. You need to ensure employee morale is kept at a sufficient level so employees are productive, want to work for you, are motivated, and have high self-esteem and satisfaction.
Consult your insurance policies and financial accounts for places to save money.
If you are looking into business expansion, make sure to carry out the necessary procedures outlined below.
Excess debts can impact companies ratings, interest rates and the ability to borrow in the future.
See Process Street‘s Financial Planning Procedure template to understand how to create a thorough future forecast.
Review your marketing methods to refine.
Maintain and invest in advertising methods that are working, but also consider cheaper alternatives and do not sacrifice impact.
Wasted time, equals wasted money. Be sure your business processes are optimized and efficient.
Adopt checklists such as this one have been shown to increase business efficiency. You can create checklists similar to this one for any business process using Process Street.
Harnessing the use of technology can offer a virtual manner of doing business.
Narrowing your business means limiting the types of services or products you offer. This allows you to refine a small subset of products and services you offer to improve your bottom line.
Consult and analyze your current space and how it is being used.
Employees are a company’s greatest asset – they’re your competitive advantage. You want to attract and retain the best; provide them with encouragement, stimulus, and make them feel that they are an integral part of the company’s mission. – Anne M. Mulcahy
As stated by Anne M. Mulcahy, a highly successful American businesswoman, employees are your companies greatest asset.
It is important to assess how you are utilizing the skills of your employees, and are you motivating your employees to work to the best of their ability and be productive.
By providing a quality service or product, you will obtain positive referrals and repeat purchase.
Once you have established a good reputation you can charge higher prices as customers we will be willing to pay to use you, as opposed to another business with a not-so-good reputation.
Based on the previously outlined criteria for reducing unnecessary costs, you can set your own personal targets to reduce unnecessary costs in your business.
The dropdown menu represents a conditional step in this process. By selecting ‘Yes’ or ‘No’, you will be directed to the relevant steps in the Cash Management Process.
This task uses our dynamic due date feature. Once a date has been set to review the targets, you will be reminded a day before this date in regards to the upcoming due task.
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{{form.Summarize_your_efficiency_goals.}}
{{form.Summarize_how_you_could_lower_your_financial_expenditures.}}
{{form.Summarize_how_you_could_reduce_your_marketing_costs.}}
{{form.Identify_improvements_needed_for_more_efficient_use_of_time.}}
{{form.Summarize_how_you_could_use_technology_to_reduce_business_costs.}}
{{form.Summarize_how_you_could_narrow_your_business_focus.}}
{{form.Summarize_how_you_could_improve_the_use_of_your_current_space.}}
{{form.Summarize_how_you_could_maximize_your_employee_skills.}}
{{form.Identify_areas_where_you_can_improve_the_quality_of_your_business.}}
You can email the set targets to relevant personnel using our email widget below.
The importance of financial report production cannot be underestimated.
Financial reports provide you and potential investors with the required information in regards to your business.
Financial reports help you make good management decisions. and are vital for business success.
By consulting your financial reports, you will be able to see warning signs of potential cash flow issues which could arise. For example:
You should spot these warning signs in advance and produce a plan to mitigate against them.
Our dynamic due date has been used in this task. This task is due for completion 1 day before the set due date for credit control target reviewal.
{{form.Set_targets_based_on_the_summarized_areas_for_improvement,_to_improve_your_credit_control_procedure.}}
Our dynamic due date has been used in this task. This task is due for completion 1 day before the set due date for sale target reviewal.
{{form.Set_targets_based_on_identified_areas_of_improvement_for_the_sale_forecasts.}}
Our dynamic due date has been used in this task. This task is due for completion 1 day before the set due date for supplier relationship target reviewal.
{{form.Set_targets_to_achieve_supplier_relationship_improvements.}}
Our dynamic due date has been used in this task. This task is due for completion 1 day before the set due date for stock control target reviewal.
{{form.Summarize,_based_on_the_above,_areas_for_improvement_in_your_stock_control_measures.}}
Our dynamic due date has been used in this task. This task is due for completion 1 day before the set due date for reducing unnecessary costs target reviewal.
{{form.Set_targets_to_achieve_these_required_improvements_to_reduce_unnecessary_costs.}}
Our dynamic due date has been used in this task. This task is due for completion 1 day before the set due date for target re-review.
This is a stop task, this checklist cannot be completed until it is confirmed set targets have been completed. If targets have not been met, review previous tasks to ensure an effective action plan is drawn up for target completion.
Be sure to be realistic about what you can achieve as a business, especially if you are regularly facing cash problems.
PayPie – 12 Thought-Provoking Cash Flow Quotes and Expressions
Franklin James – Simplifying The Credit Control Process For You
pipedrive – When And How To Adjust Your Sales Forecast
purchasecontrol – 10 Strategies for Improving Supplier Relationship Management (SRM)
Business Victoria – Set Up A Stock Control Process
Inc. – 4 Ways That Supporting Charity Is Good for Business
Investopedia – Cost Of Goods Sold – COGS
Cambridge Dictionary – stock on hand
American Express – 10 Simple Ways To Cut Business Costs
Chron – The Benefits of Good Employee Morale at Work
Anne M. Mulcahy – Brainy Quote
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