Advanced Cash Flow & Working Capital Management

Overview:

Introduction:

In recent years there has been a growing recognition that, in the long run, effective management of cash flow is more important than profit. Long-term cash flow is the real value of a business. It has also been recognized that there is significant potential for improved financial performance from the more effective management of working capital – both directly from immediate cash gains and reduced net interest costs, and indirectly through its impact on increased profitability and return on capital employed. A key challenge in achieving these performance improvements results from the fact that actual levels of working capital and delivery of cash flow are effectively determined by the day-to-day actions of a great many managers and staff, which in large corporations often run into tens of thousands.

Course Objectives:

At the end of this course the participants will be able to:

• Understand the fundamentals of effective management of cash flow, including the optimization of the level of working capital.
• Develop practical experience of how to manage cash flow and optimize working capital to facilitate such delivery in real-life business situations.
• Increase personal financial skill levels
• Develop confidence through understanding the major drivers of successful financial performance.
• Learn many technical skills, all of which lead to the ability to calculate the required figures and implement them into value-adding business decisions.
• Understand balance sheets and profit-and-loss statements
• Understand the importance of cash as the lifeblood of a business
• Focus on key management areas of inventory accounts receivable, and accounts payable
• Understand how to control and manage the cash flow of a business
• Forecast cash flows and draft a cash budget
• Evaluate projects based on their expected cash flows
• Incorporate risk into financial decisions

Targeted Audience:

• Treasury Team Members
• Commercial Managers
• Receivables and Payables Team Members
• Planning and Budgeting Managers
• Financial and Management Accountants
• Capital Investment and Project Management Team Members

Course Outlines:

Unit 1: Accounting for Cash & Performance:

• A Performance Management Model
• The Financial Language
• Accounting Basics
• Cash Flow and Working Capital
• The 3 Key Financial Statements
• Cash VS Profit
• Using financial statement to manage cash and working capital

Unit 2: Measuring & Improving Performance:

• The Impact of Inflation on Financial Performance
• Measuring Performance: Ratios and KPIs
• Benchmarking of Performance
• Ratios for cash and working capital management
• Basics of working capital management
• Credit Risk Management
• Financial modeling for cash and working capital management
• Spreadsheet modeling and tools and approaches

Unit 3: Strategic Cash Management:

• Cash & Cost modeling
• The Economic Value Model
• The Time Value of Money and Discounted Cash Flow (DCF)
• The Key Investment Indicators
• Defining the Right Base Case, Sensitivity and Risk Analysis
• Treatment of Working Capital
• Valuing Companies and Acquisitions
• Where Does Net Present Value (NPV) Come From?
• The Drivers of Value
• Learning from Experience and Delivering Project Value

Unit 4: Optimisation of Working Capital:

• Optimization not Minimisation
• Key Issues
• Stock
• Debtors
• Creditors
• Stores
• Settlement Options
• The Cost of Working Capital
• Long term
• Short term
• Practical Examples
• Engaging the Organisation

Unit 5: Cash Flow Planning and Forecasting:

• Approaches to managing cash resources
• Cash flow forecasting methods
• An integrated approach to risk management
• Techniques for managing risk
• Building a key driver cash flow forecast
• Sensitivity testing cash flow forecasts