How to See & Survive a Cash Crisis - Matt McKinlay, Partner

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Cash ManagementAgenda

Why How Help!

_________ is King!

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Reasons to Manage Cash

1. Early warning system

2. Identify problems with customers

3. Ensure payment of suppliers and employees

4. Comply with lender requirements

5. Control the way cash is expended

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How to Manage Cash

1.Take control of cash

2.Create a cash reserve

3.Forecast cash

Week 1 Week 2 Week 3 Week 4 >>>> Week 13 TOTALReceipts

Cash Sales -$ Collection of AR (invoiced) - Not Yet Invoiced Collections - Other Receipts - -$

TOTAL Receipts -$ -$ -$ -$ >>>>> -$ -$

DisbursementsPayroll / Taxes -$ Rent - Trade Payables (bills received) - Estimated Expenses (No Invoice Yet) - Loan Repayment -

Total Cash Outflow (non-payroll) -$ -$ -$ -$ >>>>> -$ -$

Operating Cash Flow -$

Beginning Cash Balance $100.0

Change in Operating Cash Flow -

Total Ending Cash Balance $100.0 +/- $Z

$X,XXX.X - $Y,YYY.Y = $Z,ZZZ.Z

$Z,ZZZ.Z$100.0

$100.0 +/- $Z

(000's)

$Y,YYY.Y$X,XXX.X

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Key Principle

“Never disburse more in a week than cash in the bank at the end of the previous week”

Forecast Actuals

Week 2 Week 2Variance

B/(P) CommentsReceipts

Cash Sales 62.0$ 58.0$ (4.0)$ Rain slowed foot trafficCollection of AR (invoiced) 11.8 10.0 (1.8) Tom James did not payNot Yet Invoiced Collections 5.0 5.0 Pre-payment for large orderOther Receipts 28.0 28.0 Sold consigned goods-$

TOTAL Receipts 73.8$ 101.0$ 27.2$

DisbursementsPayroll / Taxes (95.0)$ (100.0)$ (5.0)$ Overtime > ForecastRent (75.0) (75.0) Paid one week early - timing issue.Trade Payables (bills received) (12.0) (9.4) 2.6 Timing issue.Estimated Expenses (No Invoice Yet) - (4.7) (4.7) Unexpected ceiling repairLoan Repayment (10.6) - 10.6 Timing issue - will pay next week.-$

Total Cash Outflow (non-payroll) (117.6)$ (189.2)$ (71.5)$

Operating Cash Flow (43.8)$ (88.2)$ (44.3)$

Beginning Cash Balance 183.0$ 183.0$ Change in Operating Cash Flow (43.8) (88.2)

Total Ending Cash Balance 139.2$ 94.8$ (44.3)$

Week 1 Week 2 Week 3 Week 4 >>>> Week 13 TOTALReceipts

Cash Sales 68.0$ 62.0$ 60.0$ 60.0$ >>>>> 71.0$ 321.0$ Collection of AR (invoiced) 30.0 11.8 10.0 - >>>>> 51.8 Not Yet Invoiced Collections 5.0 10.0 >>>>> 29.0 44.0 Other Receipts 28.0 >>>>> 28.0 -$

TOTAL Receipts 98.0$ 73.8$ 103.0$ 70.0$ >>>>> 100.0$ 444.8$

DisbursementsPayroll / Taxes -$ (95.0)$ -$ (95.0)$ >>>>> (35.0)$ (225.0)$ Rent (75.0) >>>>> (75.0) (150.0) Trade Payables (bills received) (15.0) (12.0) (9.4) (2.4) >>>>> - (38.8) Estimated Expenses (No Invoice Yet) - - (4.7) (23.6) >>>>> (40.0) (68.3) Loan Repayment - (10.6) - - >>>>> (11.0) (21.6)

Total Cash Outflow (non-payroll) (15.0)$ (117.6)$ (89.2)$ (121.0)$ >>>>> (161.0)$ (503.7)$

Operating Cash Flow 83.0$ (43.8)$ 13.8$ (51.0)$ >>>>> (61.0)$ (58.9)$

Beginning Cash Balance 100.0$ 183.0$ 139.2$ 153.0$ >>>>> 102.1$ 100.0$ Change in Operating Cash Flow 83.0 (43.8) 13.8 (51.0) (61.0) (58.9)

Total Ending Cash Balance 183.0$ 139.2$ 153.0$ 102.1$ >>>>> 41.1$ 41.1$

(000's)

Maintaining a positive bank

account balanceMaking Payroll

TwoTwo Points of Emphasis

TwoHow to Survive a Cash Crisis

1. Take control of cash2. Identify hidden cash3. Find expense savings4. Restructure trade payables5. Rid organization of deadwood6. Collect money from customers

TwoHow to Survive a Cash Crisis

7. Factor receivables8. Sell unproductive assets9. Restructure long-term

agreements10. Restructure bank debt11. Consider sale leasebacks12. Explore other sources of financing13. Hire professional help

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Cash ManagementLearnings

Why How Help!

Thank you for attending todayFor a copy of the presentation, send an email to

info@advancedcfo.com with “Webinar – Cash Management” in the subject line

Presenter:Matt McKinlayPartner, Advanced CFO