now everyone can prepare daily cash flow report - sample chapter 1.0
DESCRIPTION
A comprehensive guide line on how to prepare your business daily cash position reportTRANSCRIPT
This is only a sample chapter and cannot be used as a guideline for preparing your
business daily cash flow report. If you would like to buy a complete chapter of the book
(which is 81 pages in total), please click on
http://uploadnsell.com/buy/WXi04L
and the price is only USD 9.99 and in pdf format.
Once you have made your payment, you will be given a download link where you can
download the pdf file in a couple of minutes.
2
PRESS RELEASE
New book offers guidance for helping every one preparing their daily business
cash flow report
“Now Everyone Can Prepare Daily Cash Flow Report” by Kamarulzaman Baharom offers a
narrative guiding principle for helping business owner to understand the daily cash flow report.
Kuala Lumpur, Malaysia June 11, 2011 – “Now Everyone Can Prepare Daily Cash Flow
Report” by Kamarulzaman Baharom is a book intended to help every business owner understand
their business cash flow and how they can prepare it in a daily basis.
“I would like to quote what Donald Trump said in his book – Think Big, “Finance and business
are dangerous waters where vicious sharks are swimming around looking to feed on innocent
novices. In this game, knowledge is the key to power. Spend the money necessary to know what
you are doing or somebody will quickly be doing you” with this book you can leverage on my 13
years experience in cash management and you can prepare your daily business cash flow like a
professional, in a couple of days” Kamarulzaman says.
He added “Preparing a daily cash flow report is one of the greatest challenges every one can face
since there is not even one book in the market than can give you a comprehensive guiding
principle to follow”
With this in mind, “Now Everyone Can Prepare Daily Cash Flow Report” offers a narrative to
help every business owner understand how powerful and informative is the cash flow report for
their business and how they can prepare it no matter how large is their business.
Among other analogies, Kamarulzaman explains how a comprehensive and full graphic tutorial
can guide them not only one but up to three banks simultaneously involved, making preparing a
daily cash flow report as easy as using a normal excel spreadsheet.
“This book is meant to be a way of telling all business owner how easy they can grasp their
business financial health as the way every accountant knows their stuff” Kamarulzaman says.
“It addresses how preparing a daily cash flow report in a new and unique way – one that I hope
can be of benefit to every business owner in the planet who is struggling with difficulty to
prepare the most important report in business”
Written to be shared by everyone, the book is intended to spark productive interactions about the
importance of the business cash flow.
“Now Everyone Can Prepare Daily Cash Flow Report” is available for sale online at
Amazon.com, Apple iBookstore and lulu.com and are available for purchase on iPad, Kindle,
Nook, Kobo, iPhone, iPod touch, PC, Mac, Blackberry, and Android-based devices.
3
About the Author
Kamarulzaman Baharom has been entrusted to develop and monitor a cash management system
for a multinational company for more than 13 years now. Through his rigorous years of
developing cash management system for a company, countless errors and failures, he finally has
cracked a code where almost everyone can prepare a daily cash flow report for their business.
MEDIA CONTACT
Kamarulzaman Baharom
E-mail : [email protected]
REVIEW COPIES AND INTERVIEWS AVAILABLE
The press release has been published in media and one of them can be viewed here;
http://www.i-newswire.com/new-book-offers-guidance-for-helping/113388
4
This publication is designed to provide competent and reliable information
regarding the subject matter covered. However, it is sold with the understanding
that the author and publisher are not engaged in rendering legal, financial, or other
professional advice. If legal or other expert assistance is required, the services of a
professional should be sought. The author and publisher specifically disclaim any
liability that is incurred from the use or application of the contents of this book.
Copyright 2011 by Kamarulzaman Baharom
All rights reserved. No part of this book may be used or reproduced, in whole or in
part, in any form or by any means electronic or mechanical, including
photocopying, recording, or by any information storage and retrieval system now
known or hereafter invented, without permission from the author.
First Edition April 2011
5
TABLE OF CONTENTS __________________________________________________________________
INTRODUCTION ……………………………………………………….…5
Cash is King ……………………..………………………………….…………5
The Importance of Cash Management …………………………………………....6
CHAPTER 1 ……………………………………………………………….9 WHY WE SHOULD KNOW THE COMPANY’S CASH POSITION
NOW
CHAPTER 2………………………………………………………………11 HOW TO PREPARE DAILY CASH POSITION REPORT – SINGLE BANK
Step 1 : How To Record Your Payment……………….….…………………………….13
Step 2 : How To Record Your Collections…………..…………………………………15
Step 3 : Your First Daily Cash Flow Statement……………………..…………...……..18
Step 4 : Weekly Cash Flow Statement………………..……………………… ………21
Step 5 : More Sample On Receipts And Payments…………………………….……….27
Step 6 : More Advance Step By Step On How To Prepare Daily Cash Flow….………28
CHAPTER 3…………………………………………………..…………..41 HOW TO RECTIFY THE ERROR MADE DURING OUR PREVIOUS TRANSACTIONS
6
CHAPTER 4………………………………………………….….……....55 HOW TO PREPARE DAILY CASH POSITION REPORT – MULTIPLE BANKS
Step 1 : How To Record Payments From Multiple Banks…………….………………57
Step 2 : How To Record Collections For Multiple banks………………….………….61
Step 3 : How To Prepare Cash Flow Report For All The Banks……………..……….63
CHAPTER 5……………………………………………..………………69 TRANSACTIONS AT THE END OF THE MONTH
The Importance of Preparing Bank Reconciliation Statement………………………...71
Final Stage - How To Record Transactions Appear In Bank Statement……………....74
FINAL THOUGHTS…………………………………...………………..80
7
INTRODUCTION __________________________________________________________________
Cash is King
Everybody knows the phrase of "cash is king". Is it true in a perspective of the
business atmosphere today? Based on my 13 years experience in cash
management, where I have monitored a business cash flow in a daily basis for the
past 13 years in a public listed company, I cannot say it more than 110% agreed
with the statement.
I have experienced how tough it was when our company's coffer dried up due to
excessive payment made to our subcontractors and suppliers not mentioned the
overhead cost involved as well. What to do? Using our overdraft facility? Yes, it
should be the way but overdraft utilization can only be considered as a short-term
solution only. We have to find out a rock-solid solution or else we will be suffering
in the future. I mean deadly self destruction!
From my experience, we have to sense earlier the warning sign of cash problem or
else it will already be late. But how to detect it? This is how preparing a cash flow
report is crucial to a company or enterprise. Sounds familiar? Every company has
already prepared it but why the cash flow problem is still keep on going. What
went wrong?
Nothing wrong, but you have to take into account of another powerful reports
which I call it a daily cash position reports. It is like a car dashboard where you
keep an eye on the important cash figures just with a quick look, just like your car
dashboard! How to do it? From my experience, I have not seen any books that
explain or expose how to prepare a daily cash position report. I have to list down
8
the very important cash features which has been listed by Accounting Professional
Body and have to workout for more than 13 years to perfect it.
The Importance of Cash Management
Why is good cash management system is very important to today's business
atmosphere? Every companies and enterprise must have some good cash
management system in order to sustain the company's cash liquidity so that it must
always positive at all time. If not, the cash manager must find a solution on how to
funding the cash flow shortfall.
What are the cash manager's duties in order to accomplish his or her role
effectively and professionally? Here are the list of cash manager's duties according
to Financial Handbook by Alexander Hamilton Institute Inc;
1. Bank relations
2. Debt management
3. Cash forecasting
4. Improving receivables processing
5. Speeding collections
6. Receipts forecasting
7. Maintaining liquidity
8. Short-term investing
9. Managing investments
10. Overseeing bank accounts
11. Reducing idle balance
12. Slowing disbursement
13. Cash conservation
9
In 1997, just before the Asian economic downturn, I have decided that I wanted to
be a company's treasurer or in other words to take care of a company's cash
management system. Although our company was a public listed company, we still
did not have a good cash management system at that time. When I came across the
Financial Handbook as explained above and find out the cash manager's duties,
what I did was I just listed all the duties in my new job descriptions.
After a long process of developing the system, improved and perfected it with a
real corporate atmosphere and sometimes experienced a very ill-fated lesson in
performing the task. I have established and developed a comprehensive system to
all the responsibilities as listed above and fine tuned the process so that it will
interact beautifully and give an excellent daily cash position report for my financial
analysis. It takes more than 13 years to perfect the method and I think it’s more
than worth it to dedicate my career in cash management.
One way to grasp the importance of cash management is to view cash as your most
important resource. Your goal then is to ensure that your supply is always
sufficient to the needs of your company. You may take advantage of discount
offered by your suppliers because of your prompt payment to them or manage to
earn extra income of your surplus fund as a result of your well-timed and properly
manage of your business cash flow.
I have spent more than 25,000 working hours to perfect the cash management
system and off course this inclusive spending my time trying to comprehend the
daily cash flow report as perfect as I can in view of the fact that this is the most
important financial knowledge that you needs to master as a basement of your cash
management solid building’s structure.
10
Stay tune and start practicing with a real corporate atmosphere in executing the
daily cash flow report. You may surprise that you now have a timely and perfect
information in bringing your company to a right path towards a greater height of
your financial goal.
Kamarulzaman Baharom
11
CHAPTER 1
Why We Should Know the Company's Cash Position Now
The importance of knowing the company's daily cash position cannot be denied. It
is a very important data in order for us to make a next movement in business,
whether to prepare payment for our suppliers or overhead expenses, invest our
surplus fund in short term investment or just for our own knowledge with the
intention that we know we are on a right trail and our financial position is in a good
shape.
To demonstrate the concept well, let us assume that we are driving a car and the
first thing that we might do is to glance the fuel gauge at the car dashboard. What
we are more concerned is the fuel indicator at that time whether we still be able to
continue driving or have to stop at the next petrol station to refill the fuel. It is not
last week fuel data or last month data that bothered us, we want the car's fuel
position now in order to make decision whether to stop at the next petrol station or
not. This applies to the same idea where company's cash position is concerned.
What we really wish is the company's cash position now and not last week or last
month’s information. The data has already historical and cannot be used to make a
decision whether we wish to prepare payment or to invest excess fund in a short
term investment.
In essence, I just want to share with you three types of cash data that we are
usually familiar with and to a certain level we can make use of the data. The first
data is a cash flow statement at the end of the month. This is the most well-liked
technique and recommended by all Accounting text book and academicians. The
cash flow statement is normally derived from Balance Sheet and Profit & Loss
12
Account for the month. While the cash flow report generated using this method is
acceptable and follows the Accounting Standard, we need an additional report so
as to give us more meaningful daily cash flow report to allow us to make a daily
financial review.
Here comes the second method of cash flow data which is called Daily Cash
Position. If we take into consideration the daily incoming cheques and daily
cheques disbursement, your cash balance will show you a precise cash position at
any point of time. The third method which is the most risky method is by simply
call the bank and requested the company’s bank balance without comparing with
the daily cash position as explained in the second method above.
The key differences between the second and third method is that the bank balance
today is not the same with daily cash position. This is because cheques that we
have already disbursed are not automatically all presented on that day and the bank
balance will includes the unpresented cheques or in other words our cheques
prepared are still not cleared by the banking system. If we would like to make a
decision on the bank balance alone, this will definitely act as a time bomb which
will gravely damage your business. Your company’s bank balance will be
overdrawn owing to the payment overspent due to miscalculation of the cheques
prepared.
13
CHAPTER 2
How to Prepare Daily Cash Position Report – Single Bank
As I have mentioned earlier, cash flow report is a very important report that every
business owner or entrepreneur must be able to analyze so that they can plan for
their next move in business. Almost all business gurus have stressed on the
importance of preparing daily cash flow report but unfortunately none of them
gave specific guiding principle on how to prepare it. Cash flow report that we
mentioned here is a dynamic or active cash flow report where it will show us the
cash position at any point of time and at the same time can act as a powerful tools
to make as much money as we are capable of by investing the surplus fund in a
very short term investment such as money market placement. Cash flow statement
that every accounting text book recommended is cash flow report generated from
Balance Sheet and Profit & Loss Account and will give us depth analysis on net
cash flow recorded from operating, investing or financing activities.
First and foremost, if we have only one bank, the opening balance for our cash
position for that month must be the closing balance for the previous month. This
can be derived from the Balance Sheet section under current asset which will state
the closing balance of the bank balance for the preceding month. If for any reason
the enterprise is not capable to generate their company's account such as P&L and
Balance sheet due to their company's scale, they can come across the closing
balance from their cash book as this is the fundamental information that they have
to prepare if they still have not set up the accounting system for their business.
If you have only one bank for your business, it is wise able to prepare your
payment according to the payment categories in your cash flow statement. For
14
This is only a sample chapter and cannot be used as a guideline for preparing your
business daily cash flow report. If you would like to buy a complete chapter of the book
(which is 81 pages in total), please click on
http://uploadnsell.com/buy/WXi04L
and the price is only USD 9.99 and in pdf format.
Once you have made your payment, you will be given a download link where you can
download the pdf file in a couple of minutes.
15
Let’s Do it
Step 1 – How To Record Your Payments
Since this is the first book in the market that will show you and guide you on how
to prepare your daily cash flow report, you have to put into practice by following
step by step instructions using diagram or table which ever is applicable.
First of all, let’s name our sample company as Prolink Enterprise and the company
is essentially a construction company. I would like to emphasize here that this
daily cash flow technique will work no matter how big is your company. Whether
your company is a sole proprietor company or a public listed company, as long as
you follow precisely the process that I will explain to you, it will works
tremendously and will certainly serve the ultimate purposes; a powerful daily cash
flow report.
As an illustration to the above sample, let’s say that you only have one bank and
let’s name the Bank as CIMB Bank. To make the life easier, as mentioned earlier
you have to prepare your payment according to your major payment categories in
your payment section.
If you have determined that your major payment categories are for payment of
subcontractors, suppliers, utilities bills, salary and others. You should pile up your
payment according to the above categories. For an illustration, just consider that
you intend to prepare the above payment as follows;
~ You intend to prepare 20 pieces of cheques to the subcontractors for the amount
of $45,000.00
16
~ You are going to prepare 10 pieces of cheques to the suppliers for the amount of
$ 15,000.00
~ You want to make payment for utilities bills such as water bill, electricity bills,
phone bills and the total amount for these bills are $ 1,250.00 and you need 3
pieces of cheques to prepare it.
~ You realized that you need to pay your employee’s overtime and certainly you
will categorize it as under salary’s category. You have to pay up another $
2,500.00 and need to prepare 5 pieces of cheques for your 5 employees.
That’s all. These are the expenses you might want to prepare right away and you
are going to prepare it on 5 Jan 2011.
For an illustration, let’s assume that the cheques serial number are started from
000001 and ended at 000039
After you have prepared the payment, you should record the transactions as
follows;
Prolink Enterprise
CIMB Bank Date Serial No Subcontractor Suppliers Utilities Bills Salary Others
5-Jan-01 000001 000039 45,000.00
15,000.00
1,250.00
2,500.00
Figure 1.1
17
This is only a sample chapter and cannot be used as a guideline for preparing your
business daily cash flow report. If you would like to buy a complete chapter of the book
(which is 81 pages in total), please click on
http://uploadnsell.com/buy/WXi04L
and the price is only USD 9.99 and in pdf format.
Once you have made your payment, you will be given a download link where you can
download the pdf file in a couple of minutes.
18
Prolink Enterprise
Cash Position As At 5 Jan 2011
CIMB Bank
BALANCE B/F AS AT 31 DEC 2010 50,000.00
RECEIPTS
Road Builder Inc
ELITE Inc 35,000.00
Sure Rich Inc
Alpha Construction 2,500.00
Beta Organization
Others 1,500.00
Cheque cancelled
TOTAL RECEIPTS 39,000.00
PAYMENTS
Subcontractors 45,000.00
Suppliers 15,000.00
Utilities Bills 1,250.00
Salary 2,500.00
Others
TOTAL PAYMENTS 63,750.00
BALANCE C/F 25,250.00
Figure 1.4
~ From the above statement, we will notice some important data that I will explain
to you as follows;
19
~ The balance brought forward (b/f) of $ 50,000.00 was a closing balance of 31
Dec 2010.
~ The closing balance carried forward (c/f) of $ 25,250.00 was a closing balance
for 5 Jan 2011.
~ The receipt of $ 39,000.00 is the total receipt from 1 Jan 2011 till 5 Jan 2011
likewise the total payment of $ 63,750.00 is the total payment from 1 Jan 2011 till
5 Jan 2011.
~ So in a nutshell, the amount of $ 25,250.00 is the amount that you still have in
your bank balance as at 5 Jan 2011. In other words, at the current moment you can
only issue cheques for expenses not exceeding $ 25,250.00. Not more than that, or
else your account will be overdrawn or overspent and you will have a trouble with
your bank.
~ From here, as we wish to know the total receipt, the total payment and the total
amount which has been generated from the business operation at any point of time
all the way through the whole month, we need to prepare another report which is
more interactive and quite tricky to prepare for whom who is not quite familiar
with Excel spreadsheet. But don’t worry, I will explain to you step by step.
20
Step 4 – Weekly Cash Flow Statement
As mentioned above, the cash flow statement in Figure 1.4 is just a cash flow that
only shows the cash position from 1 Jan 2011 till 5 Jan 2011. As we move on
throughout the month, we still need to know for instance cash flow statement as at
10 Jan 2011, cash flow statement as at 15 Jan 2011 and so forth until we reach 31
Jan 2011.So, how to do it?
For that purposes, we have to divide the income and payment column into 4
columns, which represent 1 column for each week. The reason of doing this is
simply easier to monitor our cash position performance by weekly basis instead of
just zoomed into 1 month cash flow statement which is quite difficult to prepare if
you have a huge data to slot in into collection and payment column.
The other reason that I think is much more important is to guarantee that our cash
flow report is always perfectly done and faster to prepared. Supposed that in the
third week of Jan 2011 you had hay-wired the cash flow statement without
precisely known where you have made the mistake due to a high volume of data
you tried to fit in, what you have to do is you just simply started fixing the cash
flow statement from 2nd
week of Jan 2011 onwards where you had make sure that
the 2nd
week of Jan 2011 report was correct before you move on to 3rd
week of
Jan 2011 .This will reduce the hassle of starting all over again from 1st Jan 2011.
Don’t this make your life easier and you can fix the mistake much faster?
Here is the cash flow report as at 5 Jan 2011 looks like when you had successfully
slot in the numbers from Figure 1.4 ;
21
Prolink Enterprise
Cash flow Statement For The Month Of Jan 2011
1 st week 2nd week 3rd week 4th week
(1/1 - 5/1) (8/1 - 14/1) (15/1 - 21/1) (22/1 - 31/1) 1 Jan 2011 - 5 Jan 2011
TOTAL BALANCE B/F 50,000.00 25,250.00 25,250.00 25,250.00 50,000.00
Road Builder Inc 0.00
ELITE Inc 35,000.00 35,000.00
Sure Reach Inc 0.00
Alpha Organization 2,500.00 2,500.00
Beta Organization 0.00
Others 1,500.00 1,500.00
0.00
TOTAL RECEIPTS FROM OPERATING ACTIVITIES 39,000.00 0.00 0.00 0.00 39,000.00
PAYMENTS
Subcontractors 45,000.00 45,000.00
Suppliers 15,000.00 15,000.00
Utilities Bills 1,250.00 1,250.00
Salary 2,500.00 2,500.00
Others 0.00
TOTAL PAYMENT FOR OPERATING ACTIVITIES 63,750.00 0.00 0.00 0.00 63,750.00
NET CASHFLOW FROM OPERATING ACTIVITIES (24,750.00) 0.00 0.00 0.00 (24,750.00)
BALANCE C/F 25,250.00 25,250.00 25,250.00 25,250.00 25,250.00
Figure 1.5
22
And finally this is the final product of your cash flow statement that you just
created. I hope you could understand the idea behind this report and be able to
carry out a simple formula in Excel such as how to add or subtract between the
cells in the spreadsheet.
23
This is only a sample chapter and cannot be used as a guideline for preparing your
business daily cash flow report. If you would like to buy a complete chapter of the book
(which is 81 pages in total), please click on
http://uploadnsell.com/buy/WXi04L
and the price is only USD 9.99 and in pdf format.
Once you have made your payment, you will be given a download link where you can
download the pdf file in a couple of minutes.
24
Step 5 – More Sample On Receipts And Payments
As we move along the way through the month of Jan 2011, Prolink Enterprise has
recorded more transactions and the transactions are tabulated as follows;
~ Beta Organization had posted a cheque amounting to $ 25,000.00 and has been
deposited into the company’s bank account on 8 Jan 2011.
~ ELITE Inc has transferred via telegraphic transfer of fund for the amount of $
18,000.00 into Prolink’s CIMB current account on 9 Jan 2011
~ On 8 Jan 2011, Prolink Enterprise has issued 5 cheques totaling $ 5,000.00
meant for their site office petty cash expenses.
~ Payment for 5 subcontractors and 3 suppliers amounting to $ 20,000 and $
8,500.00 respectively has been prepared on 10 Jan 2011.
~ Our site office’s personnel had personally collected one cheque from Road
Builders Inc on 11 Jan 2011 for the amount of $ 18,000.00 and straight away
deposited into the company’s account on the same day.
~ As promised earlier, Gamma Inc has issued a cheque totaling $ 4,500.00 on 12
Jan 2011for the small services works undertaken by us but the cheque is only
deposited a day after.
~ A telecommunication bills totaling $ 2,500.00 has been prepared for 2 telcos
companies on 13 Jan 2011.
25
Step 6 – More Advance Step By Step On How To Prepare Our Daily Cash
Flow Report
~ In Figure 1.1, we have prepared the payment by organizing the invoices
according to their respective categories. We will just continue with what we have
done before and the payment listing, if you have done correctly it will emerged as
follows;
Prolink Enterprise
CIMB Bank
Date Subcontractor Suppliers Utilities Bills Salary Others
5-Jan-01 000001 000039 45,000.00 15,000.00 1,250.00 2,500.00
13-Jan-01 000040 000054 20,000.00 8,500.00 2,500.00 5,000.00
Serial No
Figure 1.9
~ You will notice that we had prepared a total of 15 pieces of cheques and the
serial no of the cheques were started at no 000040 and ended at no 000054. The
date of the cheques for the serial no of 000041 was 8 Jan 2011 and ended on 13 Jan
2011 for the serial no of 000054.
~ On the payment listing list as shown at Figure 1.6 above, we will only key in
the last date of the cheques prepared which falls on 13 Jan 2011. This will give an
indicator to us that payment from 6 Jan 2011 till 13 Jan 2011 is still not recorded
into the cash position. Remember, we had recorded earlier the transaction from 1
Jan 2111 till 5 Jan 2101.
26
~ The next step is , we will insert the numbers from Figure1.15 into monthly cash
flow statement. First we need to unhide the weekly column as in Figure 1.8 and it
will looks like Figure 1.16 as follows;
Prolink Enterprise
Cash flow Statement For The Month Of Jan 2011
1 st week 2nd week 3rd week 4th week
(1/1 - 5/1) (8/1 - 14/1) (15/1 - 21/1) (22/1 - 31/1) 1 Jan 2011 - 5 Jan 2011
TOTAL BALANCE B/F 50,000.00 25,250.00 25,250.00 25,250.00 50,000.00
Road Builder Inc 0.00
ELITE Inc 35,000.00 35,000.00
Sure Reach Inc 0.00
Alpha Organization 2,500.00 2,500.00
Beta Organization 0.00
Others 1,500.00 1,500.00
0.00
TOTAL RECEIPTS FROM OPERATING ACTIVITIES 39,000.00 0.00 0.00 0.00 39,000.00
PAYMENTS
Subcontractors 45,000.00 45,000.00
Suppliers 15,000.00 15,000.00
Utilities Bills 1,250.00 1,250.00
Salary 2,500.00 2,500.00
Others 0.00
TOTAL PAYMENT FOR OPERATING ACTIVITIES 63,750.00 0.00 0.00 0.00 63,750.00
NET CASHFLOW FROM OPERATING ACTIVITIES (24,750.00) 0.00 0.00 0.00 (24,750.00)
BALANCE C/F 25,250.00 25,250.00 25,250.00 25,250.00 25,250.00
Figure 1.16
27
This is only a sample chapter and cannot be used as a guideline for preparing your
business daily cash flow report. If you would like to buy a complete chapter of the book
(which is 81 pages in total), please click on
http://uploadnsell.com/buy/WXi04L
and the price is only USD 9.99 and in pdf format.
Once you have made your payment, you will be given a download link where you can
download the pdf file in a couple of minutes.
28
CHAPTER 4
How to Prepare Daily Cash Position Report – Multiple Banks
If your company maintained 2 or 3 banks for payment processing, we have to
adjust a little bit of the technique so that we can monitor effectively the entire
bank's accounts and at the same time manage to earn extra income by carefully
investing excess fund in a short term investment. Let’s assume that your company
has 3 bank accounts and we name it as Bank A, Bank B and Bank C.
We should select one bank as your major bank where you pool all your cash in
that bank. Let's assume that our main bank is Bank B. That means all your major
collections must be deposited into this bank account. Your major expenditure
which consists of big amount payment such as subcontractors and salary payment
must also come from this cash pool account.
Any payment prepared which is small in amount but the rate of recurrence is high
such as utilities bills payment, petty cash reimbursement, staff claim and other
payment should be prepared via Bank A. We will deposit the incoming cheques
into Bank A with relatively the same amount of cheques prepared so that the
account balance in Bank A is always in ideal balance.
If we have a specific payment pattern for every month, for example we only
disburse payment for our suppliers and workshop every 25th of the month, and
then we use Bank C for our cheque payment. Here we use ZBA technique which
means Zero Balance Accounts technique where we will only transfer fund from
our cash pool account which is Bank B to Bank C only once a month. That means
there is no extra cash in Bank C, which means we have pool all extra cash in Bank
29
B for our short term investment purposes. I will clarify further the topic of short
term investment when we reach to that topic soon.
All the recommended techniques above looks complicated but the reason behind
this exceptional approach is that we would be able to prepare a daily cash position
report more speedily and perfectly without spending your time to figure out the
serial number for every categories if we just using only one bank . From our
example above, you will notice that bank A is used for bills payment, staff claims
and other payment.
That means you only have to identify 3 series of serial cheque numbers for
payment using Bank A. Bank B only has 2 types of payments which is
subcontractors and salary while Bank C is planned for suppliers and workshop
payment. The second reason of performing this approach is to avoid unused or idle
balance in Bank A and Bank C which do not earn any interest income. All our
collection has been pooled in Bank B where we can place a short term investment
from a period of overnight to one week.
To arrive at our bank balance for that day, we just compute by merely using simple
calculation which is Opening Balance + Incoming Cheques - Payment made =
Closing Balance. When placing the entire bank’s column side by side, we manage
to observe the total closing balance when we total up Bank A, Bank B and Bank C
closing balance. This is what I call the cash dashboard where we can see all our
bank balance with a quick look. Certainly it is not complete yet because we still
have not taken into consideration the available balance and cash & cash equivalent
figures. I will explain in depth all this terms when we reach to that specific subject
later on.
30
Let’s Do it
Step 1 – How To Record Payments From Multiple Banks
~ Let’s assume that we name Bank A as MBB, Bank B as CIMB and Bank C as
RHB. Apart from it, as mentioned earlier Bank B or in our example here CIMB
Bank, is also being regarded as a cash pool account where all major collections
will be deposited into this account. Like wise, major payment such as payment to
major subcontractors and salary will be prepared using this account as well.
~ As a normal practice and following the guiding principle by most of the
treasury’s manual, most of the corporations worldwide will create a cash pool
account to accumulate cash as much as it can and at the same time to invest the
surplus fund in a short term investment which the tenor will vary from an
overnight placement till 1 week depending on the availability of fund and weekly
working days conditions whether there is an extra public holiday on that week or
not.
This is only a sample chapter and cannot be used as a guideline for preparing your
business daily cash flow report. If you would like to buy a complete chapter of the book
(which is 81 pages in total), please click on
http://uploadnsell.com/buy/WXi04L
and the price is only USD 9.99 and in pdf format.
Once you have made your payment, you will be given a download link where you can
download the pdf file in a couple of minutes.
31
Prolink Enterprise
Cash Position As At 7 Jan 2011
MBB CIMB RHB TOTAL
BALANCE B/F AS AT 31 DEC 2010 15,000.00 50,000.00 25,000.00 90,000.00
RECEIPTS
Road Builder Inc 25,000.00 25,000.00
ELITE Inc 27,000.00 27,000.00
Sure Rich Inc 0.00
Alpha Construction 14,000.00 14,000.00
Beta Organization 0.00
Others 9,500.00 9,500.00
0.00
TOTAL RECEIPTS 9,500.00 52,000.00 14,000.00 75,500.00
PAYMENTS
Subcontractors 35,000.00 35,000.00
Suppliers 5,500.00 5,500.00
Utilities Bills 1,500.00 1,500.00
Salary 7,500.00 7,500.00
Others 1,500.00 1,500.00
TOTAL PAYMENTS 3,000.00 42,500.00 5,500.00 51,000.00
BALANCE C/F 21,500.00 59,500.00 33,500.00 114,500.00
Figure 1.31
~ After we have successfully transferred all the figures as per Figure 1.31. Transfer
all the figures in the total column into the monthly cash flow report. Since your
report is from 1 Jan 2011 till 7 Jan 2011, you only need to “key in” the numbers in
a first week column only. Here it comes a report as per Figure 1.32
32
CHAPTER 5
Transactions At The End of The Month
From my experience, in order for us to prepare a daily cash position in a more
faster speed every morning, we need to strategize a certain technique so that our
daily cash position can be viewed without spending a lot of time doing repetitious
work such as recorded payment made several times a day.
What I did was, I normally will printout the payment listing for a certain bank after
I’ve last recorded the payment until their last payment activities. For example, let’s
say that my last report was dated on 15 Jan 2011 and I intend to prepare a report on
20 Jan 2011. That means I will only capture payment from 16 Jan 2011 until 19
Jan 2011 into my daily cash position report as at 20 Jan 2011. To avoid
misunderstanding, payment made on 20 Jan 2011 will only be captured for the next
daily cash position report such as report on 21 Jan 2011.
The reason of doing this is to keep us away from a mix-up as we have a tendency
to prepare a payment several times a day. In essence, it is not practical to update
our daily cash position report every time we prepare a payment, unless we have a
very special reason to do so such as we have to fully monitor the cash position in
an hourly basis due to a high volume of business transaction in a particular date.
Otherwise, just stick to our normal procedure.
To capture the collection received, we have no choice but to record our collection
on the same day itself. To keep up a good cash management system, what ever
cheques that we have collected today must be deposited the soonest possible in
33
This is only a sample chapter and cannot be used as a guideline for preparing your
business daily cash flow report. If you would like to buy a complete chapter of the book
(which is 81 pages in total), please click on
http://uploadnsell.com/buy/WXi04L
and the price is only USD 9.99 and in pdf format.
Once you have made your payment, you will be given a download link where you can
download the pdf file in a couple of minutes.
34
FINAL THOUGHTS
______________________________________________
As a conclusion, by now you may realize that we had taken a lot of effort to learn
and practice on how to prepare daily cash position report. Almost more than 50
pages have been devoted just to ensure that we are more than understand and
capable of preparing the most important data in business and yet not really taught
in business finance.
From my first experience in preparing the daily cash flow report in 1997 until now
which is already the year of 2011, I have without endless effort trying to discover
any financial or business book in the market from time to time which can teach us
a dynamic daily cash flow report for business, unfortunately none of the finance
book can give us a comprehensive guiding principle as I have given to you now.
I have spent more than 13 solid years, 8 hours a day trying to perfect the cash
management system and off course this inclusive spending my time trying to
comprehend the daily cash flow report as perfect as I can owing to the fact that this
is the most important finance knowledge that you needs to master as a foundation
of your cash management solid building’s structure.
From here, I will bring you with me to explore more secrets and techniques in cash
management where you can learn how to make tonnes of money not only using
your money but using other people’s money provided that you have an appropriate
and powerful financial tools to use off which is one of my finance expertise.
35
Start practicing with a real corporate atmosphere in executing your business daily
cash flow report. You will surprise that you now have a timely and perfect info in
bringing your company to a right path towards a greater height of your financial
dream and goal. And remember, practice makes perfect.
Good Luck !
Attention !!
This is only a sample chapter and cannot be used as a guideline for preparing your
business daily cash flow report. If you would like to buy a complete chapter of the book
(which is 81 pages in total), please click on
http://uploadnsell.com/buy/WXi04L
and the price is only USD 9.99 and in pdf format.
Once you have made your payment, you will be given a download link where you can
download the pdf file in a couple of minutes.
Thank you
Kamarulzaman Baharom