A Better Option For Cash Flow Management
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January 14, 2010 A Better Option For Cash Flow Management
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Managing cash flow is one of the most challenging issues for CFOs, even in good times. In order to meet customer demands, firms are challenged to make cash flows match operational needs.Our award-winning featured speaker, Jody Padar, provides tips on how you can lower your cost of capital, overcome your cash flow concerns and improve your liquidity position. Ms. Padar is a Certified QuickBooks® Pro Advisor and is a member of the Intuit Trainer Writer network. She was recently name to one of CPA Technology Advisor's Top 40 Under 40.
Transcript of A Better Option For Cash Flow Management
January 14, 2010
A Better Option ForCash Flow Management
•James J. Matousek, CPA LTD
•www.matousekconsulting.com
•2009 The CPA Technology Advisor “40 Under 40” award winner
•Adjunct Professor, Oakton Community College, Des Plaines, Illinois
•Intuit Trainer Writer Network
Jody L. Padar, CPA MST
The Opportunity for Efficiency and Growth
Cash Flow Management Tips
What Differentiates Exchange Traded AR
The Receivables Exchange, A New Solution
Q and A Session
Agenda
Cash Flow Necessary to Sustain Growth
“You can survive decreased profits if you have cash flow, but…if cash flow takes a dive, you’re in trouble.”
Fortune Small Business, February 2009
Top 5 Ways to Position For Growth
Streamline cash flow
Take market share from competitors
Expand through innovation
Diversify your sources for working capital
Lower your cost for achieving growth and profitability
It’s advantageous for the buyer (AP) to lengthen the time from receipt of goods to payment…
…while at the same time, the seller (AR) wants to shorten the time it takes to convert inventory to cash.
The Working Capital Tug of War
Keep your eyes wide open
Review your credit policies and credit histories of your clients
Bill customers as quickly as possible
Disburse payments only when they are due
Always review current contracts and renegotiate rates/terms
Cash Flow Management Tips
How to Generate Cash Flow Effectively
Accelerate cash inflows wherever possible
Delay cash outflows until they come due
Invest surplus cash to earn a rate of return
Borrow cash at the best possible terms
Maintain an optimal level of cash that is neither excessive nor deficient
Power from Accounts Receivable Financing
Control-Cash Receipts are back in your hands.
Knowledge of Funds….What Capital you have…so your know what bills to pay and what you will have for Growth
Control + Knowledge give you POWER!
Other Benefits to AR Financing
Cost-effective way to achieve growth
Quick access to cash
Free up working capital
Leverages your customers’ good credit to improve your cash flow
More financing flexibility
The seller controls the parameters…the market sets the price
Efficient market ensures best price
Additional debt not added to your balance sheet
Total transparency surrounding the auction process and fee structure
No restrictive covenants
Seller controls the entire collection process so never loses visibility of their customers
Advantages of Exchange Traded AR
Old Traditional Fragmented Marketplace
Banks
Financial Institutions
Asset BasedLenders
Third PartyFinancing
A/RSeller
A/RSeller
A/RSeller
A/RSeller
Pricing discrepancies Inefficient Local Off-line
New Competitive Electronic Capital Marketplace
Centralized Transparent Efficient Global
A/R Buyer
A/R Buyer
A/R Buyer
A/R Buyer
A/RSeller
A/RSeller
A/RSeller
A/RSeller
The Power of the Exchange Model
Receivables Sellers Maintain COMPLETE CONTROL
Why the Exchange Model is Better
When to auction invoices
Which invoices to auction
When the auction closes
Minimum advance amount
Maximum discount fee paid
A/RSeller
A/RSeller
A/RSeller
A/R Seller
bids that fall outside of parameters are invalid A/R
BuyerA/R
Seller
Post AuctionInvoice: $100,000 Min Advance: $80,000 Max Fee: $2,000
Monday9:30am
Tuesday1:30pm
Submit Bid (Buyer 1)Advance: 88,000Disc Fee $1,700
2
Thursday10:00 am
Advance Funds$90,000(Less TRE fees)
5
Win Auction (Buyer 2) Advance: $90,000 Disc Fee: $1,500
Wednesday3:00 pm
4
30th Day 11:07am
Invoice Pays$100,000
6
TRE Remits Receivables Buyer $91,500
30th Day12:07pm
7
TRE Remits Seller: $8,500
1
Submit Bid (Buyer 2)Advance: 90,000Disc Fee $1,500
Tuesday5:00 pm
3
How The Exchange Works
Jim The Pipefitter – Real Life Example
5 Million in Sales
HVAC Contractor
23 Employees
500,000 in Receivables on B/S
Jim The Pipefitter – Real Life Example
September Auctions 75% Advance 2%- 2.5% discount
January Auctions 85% Advance 1.5% discount
Jim The Pipefitter – Benefits
Invoicing Occurs Faster
Knowledge of Funds Coming in (Cash for Friday)
Cheaper or similar to accepting Credit Card
No Contact with our customer/uses Oracle System
Control over receivables that are sold- some, all, or none-client or customer specific
I can watch in real time
Awesome TRE Customer Service
Thank you for attending today.
Please join us for a live Q&A session.
Contact Us:
The World’s First Online Marketplace for Real-Time Trading of Accounts Receivable
The Receivables Exchange
Jody L. Padar, CPA MSTJames J. Matousek, CPA [email protected]
Darryll GillardThe Receivables ExchangeVP- [email protected]
