How To Achieve Cash Flow Management From Skill To Strategy

< p > in the practice of enterprise management, the attention paid to cash flow is far from matching its importance.

All along, executives often think that cash flow management is just a skill job, and it is a little skill that administrative managers can cope with.

However, the situation is quite different now.

The global financial crisis has blocked the source of credit, making cash flow management a strategic task.

It is difficult for companies with weak cash flow to raise funds from outside. Therefore, such enterprises are unfortunately faced with such an embarrassing situation: when operating cash flow is most difficult to generate, they are more dependent on operating cash flow than ever before.

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The vicious circle of P can make the biggest companies in the world unsustainable. The fate of General Motors and Chrysler is the best example.

On the contrary, companies that actively manage cash and liquidity can use their perspective and data to achieve good performance growth even in a turbulent economic environment.

For example, WAL-MART actively manages internal resources and takes advantage of competitors' weaknesses.

To get cash, WAL-MART cut costs, stopped stock buyback plans, cut stock, and moved cash from new stores to existing stores.

This "a href=" http://www.91se91.com/news/index_p.asp "cash flow < /a" management principle makes the operation of the enterprise more effective, so that WAL-MART can continue to price cuts, but does not harm its own interests.

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< p > many executives realize that when resources are scarce, it is very important to fully understand the flow of resources in enterprises.

The economic downturn measured by cash flow and liquidity analysis tells the management team how much cash it needs to maintain business in different situations.

The correct model can reveal the key points and opportunities of the improvement process, and also point out the differences in the efficiency of different product lines, customer channels and sellers, and indicate which levers to focus on and when to pull them up.

Similarly, if we turn our attention to the outside world and pay attention to the cash flow of competitors, customers and sellers, these analyses can tell us exactly which competitors are weak, which customers are stronger and which suppliers may not survive.

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< p > under the present economic environment, the most important thing for enterprises is to use cash and capital more effectively.

However, this method will take some time to bear fruit.

The accumulated data help companies identify models, understand the reasons for the difference in liquidity and how these differences enter the profit and loss account.

Through this method and the specific steps behind it, the company can foresee the obstacles brought about by the business peak and trough, and strive for time for the management team, so that they can respond when they still have a choice.

The ultimate goal is to make the company more visionary and to manage effectively even in the continuing economic turmoil.

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< p > in the wake of the economic storm, enterprises will benefit from cash flow and liquidity.

According to the different results obtained from the analysis, the way of action should also be different.

Companies trapped in capital need to pay attention to protective measures, such as reducing inventories, reducing expenses, and reducing salaries and benefits.

And those companies with abundant cash reserves, like a href= "http://www.91se91.com/business/" and WAL-MART /a, have more strategic choices.

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< p > adopting the way of improving the efficiency of cash flow utilization is very direct and effective.

The key is to act decisively and systematicness.

According to experience, the key step is to implement a cash flow tool lasting 13 weeks from the bottom of the company to show the cash inflow and outflow of business departments weekly and monthly.

The purpose is to grasp the real-time information of cash flow and compare it with the budget, so that the problems that generate the continuous difference will be exposed, so that the company can solve it in time.

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< p > this way can make enterprises more forward-looking.

A large European high-tech group has recently discovered that although it can guarantee a large credit a year ago, the global economic slowdown still makes it difficult to cash in.

Due to the slowdown in sales and difficulties in customer payment, the business payment cycle of several older industrial equipment has been delayed.

Too much cash has been overloaded in some sectors with the least growth potential.

To make matters worse, this makes the solar energy sector with good prospects short of funds, and it is the Department that needs capital to seize a major competitive opportunity.

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< p > under such circumstances, the key issue is to list the net operating capital needed to ensure the normal operation of the company's business and functions, so as to determine how long the cash will be held up from the initial purchase of raw materials to the final customer payment.

When the company compares its cash cycle with its competitors, it finds that the efficiency of accounts receivable, inventory and accounts payable of key departments is far from that of their competitors.

Competitors receive more money, pay more delays, and manage inventory more actively.

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< p > the company finds that eliminating the gap with its competitors can save 350 million to 600 million dollars in cash.

These funds can be used to consolidate mature businesses in the downturn, and to fund the potential of solar energy businesses.

Therefore, the company has taken the following measures: strict management of < a href= "http://zs.sjfzxm.com/" > accounts receivable < /a > consummation of payment terms with suppliers, and better management of inventory by increasing immediate delivery and shortening production cycle.

The key is to enhance the company's ability to acquire information, so that managers can concentrate.

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