The Times 100 Business Case Studies Edition 15

The Times 100 Business Case Studies Edition 15 Controlling cash flow for business growth CIMA

Introduction n CIMA – the Chartered Institute of Management Accountants q q q n The world’s leading professional body for management accountancy Has over 172, 000 members in 168 countries Offers the most relevant financial qualification for business Management accountants q q q Involved in all sectors of industry Often in high level roles Forecast, monitor trends and control cash flow

Cash flow n Cash is vital to longer term trading q q q n Cash inflow from eg sales Cash outflow from eg costs of goods or labour More money spent than received = negative cash flow Cash is a ‘liquid asset’ q q Available for investment Avoids having to seek credit or loans

The cash flow cycle n Balances cash inflow against cash outflow n Lack of cash can: q q lead to business failure affect the business’ reputation

Improving cash flow n Businesses need to manage cash flow q Pay as little interest as possible n q q q Pay debts on time; consolidate at low interest Negotiate payment terms with suppliers Avoid offering discounts Make better use of assets n eg hire out warehouse space

Benefits of effective management accounting n n n Reduces uncertainty Helps to predict and plan for the future Ensures enough cash to cover debts or possible shortfalls Reduces unnecessary costs Makes cash work for the business