| Introduction |
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1 | (6) |
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1 | (1) |
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Conventions Used in This Book |
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2 | (1) |
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3 | (1) |
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3 | (1) |
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How This Book Is Organized |
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4 | (1) |
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Part I Fitting Cash Flow into the Big Picture of Running a Business |
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4 | (1) |
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Part II Using Financial Statements to Assess Cash Health |
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4 | (1) |
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Part III Getting Intimate with Your Company's Cash Flow Needs |
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4 | (1) |
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Part IV Managing Your Business with Cash Flow in Mind |
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5 | (1) |
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5 | (1) |
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5 | (1) |
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6 | (1) |
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Part I Fitting Cash Ftout into the Big Picture of Running a Business |
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7 | (74) |
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Chapter 1 Getting in Sync with the Rhythm of Cash |
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9 | (14) |
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Not Letting the Well Run Dry |
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10 | (1) |
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Outlining Profit Accounting Basics |
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11 | (3) |
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Reviewing revenue accounting |
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11 | (1) |
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Examining expense accounting |
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12 | (1) |
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Contrasting cash- and accrual-basis accounting |
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13 | (1) |
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Seeing Why Profit and Cash Flow Are Different Bottom Lines |
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14 | (5) |
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Considering what the income statement doesn't say about cash flow |
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14 | (1) |
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Exploring cash flow from profit |
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15 | (4) |
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Identifying and Reporting Basic Types of Cash Activities |
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19 | (4) |
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Cash flow from investing activities |
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20 | (1) |
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Cash flow from financing activities |
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20 | (1) |
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Cash flow from operating (profit-making) activities |
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21 | (1) |
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Putting cash-flow activities together |
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21 | (2) |
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Chapter 2 Why Accrual Accounting Is Essential |
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23 | (14) |
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Finding Out the Four Functions of Accounting |
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24 | (7) |
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Keeping records (Bookkeeping) |
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25 | (1) |
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Giving company management the information it needs |
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26 | (2) |
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28 | (1) |
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Reporting financial information |
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29 | (2) |
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Examining the Nature of Accrual Accounting |
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31 | (3) |
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Uncovering the inadequacy of cash-basis accounting |
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32 | (1) |
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Recognizing accrual accounting in financial reports |
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32 | (2) |
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Reporting Assets and Liabilities in the Balance Sheet |
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34 | (3) |
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Chapter 3 The Big Three Financial Statements |
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37 | (22) |
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Why Financial Statements Are Essential |
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38 | (4) |
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Who gets financial statements and why |
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40 | (1) |
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Who doesn't get financial statements and why |
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41 | (1) |
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Facing Off: The Balance Sheet |
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42 | (10) |
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Strolling through the balance sheet |
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42 | (2) |
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Putting accounts in their right places |
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44 | (1) |
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Dealing with the limitations of the balance sheet |
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45 | (2) |
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Tracing revenue and expenses in the balance sheet |
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47 | (2) |
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49 | (3) |
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Making Profit: The Income Statement |
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52 | (3) |
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Moving from the revenue top line to the profit bottom line |
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54 | (1) |
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Deciding which is more important: Revenue or expenses |
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54 | (1) |
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Summarizing Cash Flows: The Statement of Cash Flows |
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55 | (4) |
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Showing cash flow from operating (profit-seeking) activities |
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56 | (1) |
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Listing other sources and uses of cash |
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57 | (2) |
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Chapter 4 Getting a Grip on the Statement of Cash Flows |
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59 | (22) |
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Distinguishing Cash Flows |
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60 | (9) |
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Adjusting your way to cash flow from operating activities |
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62 | (4) |
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Cogitating on cash flow from investing activities |
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66 | (1) |
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Considering cash flow from financing activities |
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66 | (3) |
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Getting to Know the Dual Personality of the Statement of Cash Flows |
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69 | (3) |
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Spotting changes in financial condition |
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69 | (1) |
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Building the year-end balance sheet |
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70 | (2) |
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Comparing Cash-Flow Scenarios |
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72 | (5) |
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Starting with cash flow in a steady state |
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73 | (2) |
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Assessing cash-flow effects of growth and of decline |
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75 | (1) |
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Understanding negative cash flow |
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76 | (1) |
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Recognizing Problems with the Statement of Cash Flows |
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77 | (4) |
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Getting skipped by small businesses |
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77 | (1) |
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Providing too much or too little information |
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78 | (3) |
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Part II Using Financial Statements to Assess Cash |
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81 | (76) |
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Chapter 5 Mining the Balance Sheet for Cash |
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83 | (30) |
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Reading the Balance Sheet from a Cash-Flow Perspective |
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84 | (9) |
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How assets are listed in the balance sheet in relation to generating cash |
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85 | (4) |
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How liabilities are listed in the balance sheet in relation to consuming cash |
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89 | (2) |
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What the balance sheet doesn't disclose about cash flows |
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91 | (2) |
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Giving the Balance Sheet a More Thorough Examination |
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93 | (10) |
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Using key balance sheet performance-measurement tools |
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93 | (3) |
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96 | (4) |
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Taking a closer look at your liabilities |
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100 | (3) |
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Scrubbing the Balance Sheet Clean for Its Users |
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103 | (7) |
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A case study: Scrubbing the balance sheet of ACME Distribution, Inc. |
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103 | (6) |
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Aiding internal business management |
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109 | (1) |
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Providing confidence to outsiders |
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109 | (1) |
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Unlocking Hidden Cash from the Balance Sheet |
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110 | (3) |
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Turning over current assets |
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110 | (1) |
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Investing in long-term assets |
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111 | (1) |
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Leveraging your current liability friends |
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111 | (1) |
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Using notes payable, loans, and leases appropriately |
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112 | (1) |
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Chapter 6 Digging Deeper into Cash Flow |
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113 | (18) |
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Tying Up Cash Flow in a Neat Bundle |
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113 | (8) |
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Presenting financial statements for analyzing cash flows |
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114 | (1) |
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Cutting the balance sheet down to size |
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115 | (4) |
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Reviewing sources and uses of cash |
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119 | (1) |
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Zeroing in on changes in financial condition from making profit |
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119 | (2) |
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Developing Benchmarks for Cash Flow |
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121 | (6) |
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Comparing cash flow with sales revenue momentum |
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121 | (3) |
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Using other tools for cash-flow analysis |
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124 | (3) |
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Massaging Cash-Flow Numbers |
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127 | (4) |
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Chapter 7 Understanding Liquidity versus Available Cash |
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131 | (26) |
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Defining Business Solvency and Liquidity (Hint: Not the Same Thing) |
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132 | (5) |
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Applying Business-Solvency and Liquidity Measurement Tools |
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137 | (6) |
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Measuring and monitoring solvency |
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137 | (3) |
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Keeping tabs on liquidity |
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140 | (3) |
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143 | (6) |
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Tying up cash in company assets |
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143 | (2) |
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Using debt inappropriately |
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145 | (2) |
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Assuming that business growth is always good |
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147 | (1) |
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Assuming that a shrinking business always represents trouble |
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148 | (1) |
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Discovering Untapped Sources of Liquidity |
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149 | (6) |
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149 | (2) |
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151 | (1) |
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Relying on available lending sources |
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152 | (1) |
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Approaching creditors, customers, and other partners |
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153 | (1) |
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Using equity and off-balance-sheet sources of capital |
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154 | (1) |
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Financial Leverage: The Good, the Bad, and the Downright Ugly |
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155 | (2) |
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155 | (1) |
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156 | (1) |
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156 | (1) |
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Part III Getting Intimate With your Company's Cash Flout Needs |
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157 | (82) |
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Chapter 8 Creating a Business Plan to Secure Cash |
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159 | (14) |
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Outlining the Basic Business Plan |
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160 | (3) |
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161 | (1) |
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161 | (1) |
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162 | (1) |
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The financial summary: Performance and required capital (Cash) |
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163 | (1) |
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Developing a Business Plan |
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163 | (6) |
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Outlining your plan by using BOTE, WAG, and SWAG |
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164 | (1) |
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Getting the process going |
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165 | (2) |
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Using two simple but powerful tools: SWOT and KISS |
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167 | (2) |
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Incorporating Third-Party Information into Your Plan |
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169 | (2) |
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170 | (1) |
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170 | (1) |
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Riding the CART Concept: Complete, Accurate, Reliable, and Timely |
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171 | (2) |
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Chapter 9 Building Best-in-Class Projection Models to Manage Cash |
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173 | (20) |
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Rounding Up Resources to Build Financial Forecasts |
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173 | (1) |
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Planning with the Big Picture in Mind |
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174 | (4) |
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Deciding on a top-down versus bottom-up projection strategy |
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174 | (2) |
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Identifying your critical business economic drivers |
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176 | (2) |
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Building the Basic Projection Model |
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178 | (3) |
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Making the Most of Your Projections |
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181 | (12) |
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Getting familiar with some useful terms |
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181 | (2) |
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Treating forecasts as living, breathing management tools |
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183 | (1) |
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Understanding the difference between internal versus external projections |
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184 | (1) |
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Preparing multiple projection scenarios: The what-if analysis |
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185 | (3) |
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Integrating forecasts into the active management of your business |
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188 | (3) |
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Broadening the use of projections even further |
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191 | (2) |
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Chapter 10 Identifying and Securing External Sources of Capital |
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193 | (20) |
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Getting a Grip on the Capital Concept |
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194 | (1) |
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Understanding the Basics of Equity Capital |
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195 | (1) |
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195 | (1) |
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Equity and management influence |
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196 | (1) |
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Starting to Look for Capital |
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196 | (3) |
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197 | (1) |
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Turning to family, friends, and close business associates |
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198 | (1) |
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Seeking Equity Sources of Capital |
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199 | (4) |
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200 | (1) |
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Venture capitalists (VCs) |
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201 | (1) |
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Private equity groups (PEGs) |
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201 | (1) |
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Other private investment groups |
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202 | (1) |
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Accessing Public Sources of Capital |
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203 | (1) |
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Putting Your Capital to Good Use |
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204 | (5) |
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Looking at the Reality of the Current Capital Markets |
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209 | (4) |
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Ten tips for raising capital |
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209 | (1) |
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Five realities of the current capital markets |
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210 | (3) |
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Chapter 11 Knowing When to Use Debt to Finance Your Business |
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213 | (26) |
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Understanding the Basics of Debt Capital |
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214 | (2) |
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214 | (1) |
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214 | (2) |
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216 | (1) |
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Determining When Debt Is Most Appropriate |
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216 | (2) |
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When you can offer security or collateral |
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217 | (1) |
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217 | (1) |
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When you have financial strength |
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218 | (1) |
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Using Loans, Leases, and Other Sources of Debt |
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218 | (6) |
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218 | (2) |
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Making friends with asset-based lenders |
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220 | (1) |
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Leasing as a source of capital |
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221 | (2) |
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Tapping government programs and the SBA |
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223 | (1) |
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Using other sources of debt-based capital |
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223 | (1) |
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Getting Creative with Capital |
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224 | (2) |
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Generating internal cash flow |
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224 | (1) |
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Leveraging unsecured creditors |
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225 | (1) |
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Going after government aid, gifts, and grants |
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225 | (1) |
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226 | (1) |
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Leveraging Uncle Sam for Cash |
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226 | (13) |
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Four government-endorsed strategies to help improve cash flow |
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227 | (8) |
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Don't forget the SALT: State and local taxation |
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235 | (4) |
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Part IV Managing If our Business With Cash Flout in Mind |
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239 | (92) |
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Chapter 12 Covering the Basics of Cash and Cash Activity |
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241 | (26) |
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Managing the Unique Characteristics of Cash |
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242 | (7) |
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Understanding that cash ends up being one side of almost every transaction |
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242 | (2) |
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Tuning in to the constant cash hum |
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244 | (1) |
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Deciding what a normal cash balance should be |
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245 | (4) |
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Implementing Fundamental Cash Management Practices |
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249 | (6) |
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Establishing cash and bank accounts |
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249 | (3) |
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Controlling cash and bank accounts |
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252 | (2) |
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Maximizing your business's cash |
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254 | (1) |
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Understanding Cash in the Digital Age |
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255 | (7) |
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Moving and processing cash transactions electronically |
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256 | (3) |
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Establishing cash controls in electronic-based accounting systems |
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259 | (3) |
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Working with Cash as a Key Business Indicator |
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262 | (5) |
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Knowing the seasonal ebb and flow of cash |
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263 | (2) |
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Setting periodic cash level benchmarks |
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265 | (2) |
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Chapter 13 Preventing Cash Losses from Embezzlement and Fraud |
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267 | (14) |
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Setting the Stage for Protection |
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268 | (4) |
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Preventing loss with internal controls |
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268 | (1) |
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Recognizing the dual purpose of internal accounting controls |
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269 | (1) |
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Struggling with fraud committed by the business |
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270 | (2) |
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Putting Internal Controls to Work |
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272 | (6) |
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Going down the internal controls checklist |
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272 | (4) |
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Considering some important details of internal control |
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276 | (2) |
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Recognizing Limitations of Internal Controls |
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278 | (3) |
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Keeping internal controls under control |
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279 | (1) |
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Finding fraud that slips through the net |
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279 | (2) |
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Chapter 14 Managing the Selling Cycle to Improve Cash Flows |
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281 | (30) |
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Understanding the Entire Selling Cycle: Start to Finish |
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282 | (2) |
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The accounting/financial view |
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282 | (1) |
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282 | (1) |
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Why the sales cycle is the biggest consumer of cash |
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283 | (1) |
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Implementing Basic Controls in the Selling Process to Manage Cash |
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284 | (12) |
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284 | (2) |
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Being prudent with credit review and approval |
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286 | (3) |
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Setting proper terms and conditions |
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289 | (2) |
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Supplying CART --- complete, accurate, reliable, and timely --- invoices |
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291 | (1) |
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Managing past-due accounts and collection efforts |
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292 | (4) |
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Getting Creative to Improve Sales-Related Cash Flows |
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296 | (8) |
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Using discounts: The double-edged sword |
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296 | (1) |
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Offering creative payment terms |
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297 | (2) |
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Using deposits, advances, and prepayments |
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299 | (1) |
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Accepting alternative forms of payment |
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300 | (3) |
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Managing seasonality in the selling cycle |
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303 | (1) |
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Managing the Lending Agreement in Relation to Your Sales Cycle |
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304 | (7) |
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Defining eligible receivables |
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304 | (1) |
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Understanding advance rates and dilution |
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305 | (1) |
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Watching for hidden time bombs in your lending agreement |
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306 | (3) |
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Driving a lending agreement to improve liquidity and access to cash |
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309 | (2) |
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Chapter 15 Managing the Disbursement Cycle to Improve Cash Flows |
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311 | (20) |
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Tracing the Entire Disbursement Cycle |
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311 | (2) |
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Taking Critical Steps in the Disbursement Cycle to Manage Cash |
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313 | (5) |
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Qualifying suppliers and vendors |
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313 | (1) |
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Establishing proper disbursement cycle controls |
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314 | (2) |
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Managing external creditors |
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316 | (2) |
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Getting Creative to Improve Cash Flows from the Disbursement Cycle |
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318 | (6) |
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Leaning on vendors and suppliers |
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318 | (2) |
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Using JIT payment strategies |
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320 | (1) |
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Grading your vendors and suppliers |
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320 | (2) |
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322 | (1) |
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Creating cash from inventory |
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323 | (1) |
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Tapping vendor-provided financing |
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324 | (1) |
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Leveraging Your Employees for Cash |
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324 | (7) |
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Timing commissions and bonuses |
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325 | (1) |
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Connecting compensation to performance |
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326 | (1) |
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Utilizing noncash forms of equity compensation for employees |
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327 | (1) |
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Checking out other benefit strategies and ideas |
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328 | (3) |
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331 | (20) |
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Chapter 16 Ten Keys to Managing Cash Flows in a Small Business |
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333 | (8) |
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Respect and Understand Financial Statements |
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334 | (1) |
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Plan, Do Projections, and Plan Some More |
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334 | (1) |
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Focus on Capital and Cash: The Lifeblood of Any Business |
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335 | (1) |
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Understand Your Selling Cycle |
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336 | (1) |
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Manage Your Disbursements Cycle |
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336 | (1) |
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Be Creative to Generate Cash |
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337 | (1) |
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Balance the Balance Sheet |
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338 | (1) |
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Understand External Capital Markets |
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338 | (1) |
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Protect Cash at All Times |
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339 | (1) |
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340 | (1) |
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Chapter 17 Ten Tales of Cash-Flow Woes |
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341 | (10) |
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Misunderstanding Trade Account Receivables |
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341 | (1) |
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Letting Good Inventory Go Bad |
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342 | (1) |
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Improperly Investing in Soft Assets |
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343 | (1) |
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Falling into the Taxable Income Trap |
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344 | (1) |
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Misapplying Available Debt-Based Capital |
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345 | (1) |
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Failing to Prepare for the Economic Hard Landing |
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346 | (1) |
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Getting Left in the Cold by Changing Market Conditions |
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347 | (1) |
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Making Overly Optimistic Sales Forecasts |
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348 | (1) |
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Robbing Peter to Pay Paul |
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349 | (1) |
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Growing Yourself Out of Business |
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350 | (1) |
| Index |
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351 | |