CashFlow ABC: Recent Episodes
John & Dave
Forecasts are more accurate in the aggregate. But, for production planning, capacity planning and procurement you can’t use an aggregate forecast. You will need a tool to determine the individual SKU forecast so you may perform your planning functions that allows production to function. There are multiple versions of planning bills but for now we’ll [...]
As with most things in life if you don’t measure it you don’t know where you are or if you need to improve. While this can be bothersome in your personal life with measurements such as how much you weigh or your waistline it’s a necessity in business. So we’re going to talk about several [...]
This week’s episode is an open forum discussion regaring the pros and cons of physical inventories and cycle count programs. We discuss why physical inventories need to be performed, the benefits of cycle count programs and what must be accomplished before physical inventories can be replaced with a cycle count program which will save you [...]
The How & Why Direct vs. Indirect method Net Income & adjustments Cash from Operations a. Sources & uses of cash b. Prepaid expenses c. Accrued expenses d. Accounts Payable e. Accounts Receivable Example: think about a $150 invoice from an electrician to fix a light switch. The work is performed in March and you [...]
The Statement of Cash Flow is the evolution of the Statement of Changes in Financial Position. It is a highly useful tool within the guidelines of Generally Accepted Accounting Principles (GAAP) to effectively analyze the operations of an organization from a financial perspective. It is a common, and true, statement that “Cash is King”. This [...]
Whether you operate a warehouse, retail sales, service or manufacturing business you have some form of inventory. In the past we have discussed some of the methods for maintaining the proper levels of inventory now we will discuss where to put these items within your facility. You will have items that you use frequently and [...]
Valuation methodologies Weighted Average Weighted average is, perhaps, the easiest of the valuation methodologies. You have no variances to analyze, only variation. As the title implies, weighted average costing averages the purchase price of products and absorbs any price variation into your P&L through Cost of Goods Sold. Standard Cost In Standard Cost, you establish [...]
There is a lot of talk regarding Lean improvements for business. Removing waste, improving efficiencies and increasing profitability has become the battle cry of businesses around the country and the world. But this is untested ground. Where does one take the first step? How does a company begin to head down this road to continual [...]
Turning Supply Chain Management into a Profit Center There are a number of ways to generate value for your organization through the management of the supply chain. One thing that you will want to do is publish your results publicly within the company. This will serve three purposes: (a) Toot your horn – you [...]
The purpose of safety stock is to protect against fluctuations in demand or supply or any uncertainty. Safety stock is based and dependent on: Frequency of ordering Variability of demand (compared to the forecast) Desired service level We’ll address these one at a time: Frequency of ordering – How often you order [...]
My Podcast Alley feed! {pca-6c7296ef12a7f56be0cf864a4412a32a} We’ve seen a lot of queries lately asking various questions about the Statement of Cash Flow so we’re going to take this opportunity to demystify this alien evil. We’re going to use a basic Statement of Cash Flow for Little Johnny’s Lemonade Stand that he set up in front of [...]
In any business setting, you need to be measuring appropriate Key Performance Indicators (KPI’s) to keep on top of the performance of the business. The basic process for utilizing KPI’s is: Identify what measurements are most important to your business Measure the “current state” of the KPI’s Establish targets for where you want them to [...]
EOQ is a method for setting a consistent order quantities that both minimize ordering and inventory carrying costs. EOQ can be used hand in hand with reorder point systems as they function under similar assumptions: That demand is relatively constant and known. The order quantity is usually the same. (The EOQ will remain constant until [...]
Asset protection Form an LLC or incorporate to protect your personal assets – Don’t comingle. Use a business entity to separate your personal and business self. Priorities Payroll first – pay your employees first or they will soon be former employees. What will generate cash? Figure it out and and pay those bills first to [...]
A reorder point is a calculated stock level that, when reached, generates replenishment either through procurment or manufacturing while leaving enough inventory to satisfy demand during the replenishment process. Reorder points work better in situations where demand is more or less constant and predictable or with slight variation. All reorder points contain safety stock to [...]
Lets talk about cash flow & understanding the statement of cash flow. Revenue, or sales, accounts are the selling value of goods or services billed to the organization’s customers. Revenue, also called “the top line” because of it’s location on the income statement, is the starting point for calculating net income. Expenses are subtracted [...]
A forecast is an estimate of future demand based on market indicators and/or past performance plus market indicators. We forecast to reduce the amount of uncertainty in order to prepare for demand. Who is impacted by a forecast? Finance Investment capital AP forecasting Operational budgets Inventory planning – for make to or order to stock [...]
This episode of CashFlow ABC is on effective AR management. Accounts Receivable is one of the largest components of working capital for most companies, and the one most easily turned into cash. We highlight and discuss the essentials to maximize your current and future cash flow through accounts receivable. 1. Measure, analyze, improve a. [...]
Materials management is the sumo arena the company’s other departments wrestle in. Each of these departments; sales & marketing, production and finance will have different ideas on how the company is to prosper and make a profit. Sales and marketing want a seemingly endless supply of finished goods and replacement parts to maintain sales without [...]
Welcome to the kick-off for CashFlowABC, where we teach you the ABC’s of cash flow. CashFlowABC will be a bi-weekly podcast covering all avenues to improve your cash flow. We will be looking at how you manage inventory, accounts receivable, accounts payable, your supply chain, lean principles, kaizen events and more. Most importantly, we need [...]