Advanced Management of Cash Flow and Working Capital

Introduction:

For some time now, there has been increasing recognition that focusing solely on profits in the long run is less critical than effective cash flow management. The real value of a company lies in the efficient generation and utilization of cash, coupled with long-term working capital management.

The Working Capital and Cash Flow Management course acknowledges that there is significant potential to enhance an organization's financial efficiency through better management of working capital. This can lead to short-term improvements in cash flow, reductions in net interest expenses, and overall improvements in income and return on invested capital.

One challenge in achieving these performance improvements is that actual working capital levels and cash flow depend on the day-to-day actions of numerous managers and staff. In large corporations, this can involve thousands of individuals.

This Advanced Cash Flow and Working Capital Management Course covers the fundamental principles, techniques, and skills necessary for professional cash flow and working capital management in any business. It includes comprehensive cash flow management modules as well as extended training courses designed to enhance financial proficiency.

Objectives:

By the end of this Working Capital and Cash Flow Management course, participants will be able to:

• Manage cash flows effectively, including the management of functional working capital levels.
• Participate in cash management exercises and troubleshoot working capital management in real-world business situations.
• Enhance their personal financial management capabilities.
• Develop a solid understanding of the determinants of successful management, thereby boosting self-esteem.
• Perform calculations to arrive at business-related figures, adding value and scaling up business operations.
• Understand financial documents, including balance sheets and profit-and-loss statements, beyond basic financial statements.
• Recognize the critical importance of cash as the lifeblood of every business.
• Focus on key areas of inventory, accounts receivable, and accounts payable management that are often overlooked.
• Operate and manage the inflows and outflows of a business's cash more efficiently.
• Prepare cash flow projections and develop a comprehensive cash budget.
• Assess investment proposals using cash flow estimates for informed decision-making.
• Incorporate risk and uncertainty into financial analysis and decision-making.

Training Methodology:

• Interactive lectures
• Case studies
• Group exercises
• Financial modeling simulations
• Situation analysis

Course Outline:

Unit 1: Concepts of Cash Flow Management and Performance Measurement

• Performance management model of cash flow.
• The financial language.
• Accounting basics.
• Management of working capital and cash flows.
• Three fundamental financial reports.
• Cash flow versus profit.
• Utilizing financial documents in cash flow and working capital management.

Unit 2: Performance Measurement and Enhancement

• The impact of inflation on business financial performance.
• Methods of performance evaluation: Ratios and KPIs.
• Performance appraisal against standards.
• Cash and working capital management ratios.
• Fundamentals of working capital management.
• Credit risk management.
• Financial models for managing cash flow and working capital.
• Spreadsheet models, tools, and methods.

Unit 3: Strategic Cash Management

• Cash flow modeling and cost analysis.
• Economic value-added model for cash flow.
• Time value of money and application of DCF.
• Core financial investment ratios.
• Identifying base case, sensitivity, and risk scenarios.
• Treatment of working capital.
• Company and merger valuation.
• Origins of NPV.
• Key value drivers.
• Lessons from execution and extracting value from projects.

Unit 4: Optimization of Working Capital

• Goals: Optimization, not minimization.
• Foundational aspects of working capital management.
• Inventory management.
• Accounts receivable management.
• Accounts payable management.
• Depots and settlement methods.
• Working capital costs: Permanent and current.
• Practical examples using case-based methods.
• Group outreach and application.

Unit 5: Cash Flow Planning and Forecasting

• Exploiting cash reserves efficiently.
• Cash forecasting methods.
• Systematic risk management.
• Developing a fundamental driver model for cash flow forecasting.
• Sensitivity analysis of cash flow forecasting to managerial variables.