Cash Management for Precision Machines - Essay Example

• Information technology adoption

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• Marching cash available with financial obligations

• Creative cash flow reporting

Recommendations

Economic and market forces

• Customer needs

• inflations

 McFarlane, F. W. (1984). Information technology changes the way you compete (pp. 98-109). Harvard Business Review, Reprint Service. Companies can shorten the period taken to convert credit sales into cash. If the company decide to adopt an electronic mode of delivering invoices and not the traditional method of using emails, then the company will automatically reduce the period it takes to convert credit sales into cash. It would be good for the company to implement a vendor portal. The use of vendor portal makes it possible for the company to allow all the stakeholders to access invoices. Another important thing with the method is that it makes it possible for an organization to solve disputes in a short time. Resolving disputes on invoices will make it possible for the business to make robust book reports. 

Davidson, P. (1986). Finance, funding, saving, and investment. Journal of Post Keynesian Economics, 9(1), 101-110. Precision Machines management should match its funding with its cash flow obligations. For Precision machines to operate, then it requires short term requirements that will cover up for its daily operations. The day-to-day operations of the company are what makes it possible for the company top prosper. Therefore it would be advisable for the organization of the company to ensure that its obligations cannot strain its cash available. The long-term obligations are that capital investment that is made for the future running of the organization. Cash flow management needs to be proficiently taken care of through matching of all the resources that are available for funding of its capital investment.

Mulford, C. W., & Comiskey, E. E. (2005). Creative cash flow reporting: Uncovering sustainable financial performance. John Wiley & Sons. Precision Machines should make it visible where all its cash is from and where they are invested in. If the company is to ensure that is has adopted a cash management culture then its finance department needs to ensure that it has maintained a track of its cash flows. The company needs to be creative on the way it makes its forecast. The management, therefore, is required to look at both its income and cash flow statements. What follows is to link the cash flow forecast with the company’s cash flow outlook. There are working capital metrics that continuously requires the attention of the management. These include day’s inventory on hand, day’s sales outstanding and day’s payable outstanding. When making a cash flow report then it is worth reporting on all the capital expenditures repayments of debt and operating cash flows. The purpose is to enhance accuracy when making forecasts that will automatically affect the performance of the company in the future.  

Recommendations

The management of precision machines should take an enterprise-wide approach to its cash management. It would be best practice if the company ensures that it has kept track of all its sources. The use of cash for the enterprise also need to be indicated especially if the company operate in other geographical locations. The business also should ensure that it has optimized its matching of cash and capital expenditures (long and short terms obligation). Therefore creative cash flow reporting is what will work best for the company in its plans to ensure reduced costs and optimization of profit.

Economic and market Forces 

The customer needs is a market factor that will have an impact on the overall performance of Precision Machines. The economic factors play a role towards the success or failure of the company. There is no strategy the company will make without taking consideration of the consumer needs and requirements. The company offerings to satisfy the company will depend on how the company treats its customer positions on the overall corporate strategy. There are shifts in customer needs depending on new competitors in the industry. The focus should, therefore, be beyond the current demand of Precision Machines. 

An Economic factor that will have an impact on the company is inflation. A case where there is a high inflation means that the company will be faced with an increased profits. The costs of operating the company business will also increase. It, therefore, means the demand for Precisions machine products will go up. The employment market will be changed towards an increased wages. The company will, therefore, be forced to make changes to its financial strategies to accommodate the inflation impact on the industry.   

References

McFarlane, F. W. (1984). Information technology changes the way you compete (pp. 98-109). Harvard Business Review, Reprint Service

Davidson, P. (1986). Finance, funding, saving, and investment. Journal of Post Keynesian Economics, 9(1), 101-110.

Mulford, C. W., & Comiskey, E. E. (2005). Creative cash flow reporting: Uncovering sustainable financial performance. John Wiley & Sons.