Although the two are classmates, Chen Wanshi is now the general manager of Fuma Company. As a sales manager, Dong Xiaoya, Chen Wanshi is her immediate boss. But Dong Xiaoya never considers this.
When people talk face to face, Dong Xiaoya always seems very casual and says whatever she wants.
"Mr. Dong, you also know that companies under the modern management system have always emphasized that 'cash is king'. According to relevant research by domestic and foreign experts, more than 80% of company business failures are attributed to poor cash flow management.
Cash flow problems have killed many companies that could have survived! We want to avoid making the same mistakes again, and we want Fuma to survive safely." Chen Wanshi explained patiently.
Dong Xiaoya looked disapproving and continued to retort: "What you said is correct, and I also know the principle of 'cash is king'. However, profit is also an important factor for the company to survive! If there are no sales orders,
Where does the profit come from? Without profit, how can a company that spends money as long as it opens its doors survive?"
Chen Wanshi shook her head and said: "Manager Dong, as well as all the managers here, everyone must clearly realize that the profits that only appear on the books are not cash flow, and they cannot be used to pay our company's accounts payable. You
Some of the sales orders I saw may have helped the company create profits on paper, but actually did not obtain any cash flow, because the accounting period of these sales orders is too long. As far as I know, there are many companies
In fact, they were complacent about the profits on their books, but did not consider the recovery time of the payment. They relaxed their vigilance more and more, which eventually led to the rupture of cash flow. They had to take risks and introduce "loan sharks" to tide over the difficulties; some companies even
After obtaining a 'loan shark', it was unable to pay due accounts payable, and did not have enough cash to pay employees, purchase materials, etc. Various business affairs quickly fell into trouble, and in the end they had to declare bankruptcy.
"
Chen Wanshi looked at Dong Xiaoya and continued to conclude: "So, having a sales order does not necessarily mean that you will have cash flow - it can even be said that having a sales order with a long account period will further exacerbate the situation.
Cash flow pressure. Because after we receive a sales order, we usually have to pay to purchase raw materials, pay employee wages, and amortize various operating expenses... When the raw materials become finished products, we have to spend money to store them.
Until the finished product is sent to the customer, it is converted into accounts receivable on the books... Manager Dong, as you know, it has been difficult to collect accounts receivable recently, and many customers' accounts receivable are overdue. I
Now I am very worried whether this overdue phenomenon will get worse; I am even considering that if some customers can pay our accounts receivable on time or even in advance, I can give them a discount of 1% of the total sales contract amount...
…”
Dong Xiaoya shook her head heavily, expressing her disapproval of Chen Wanshi's words. She pouted and added angrily: "Haha! Wanshi, according to what you are saying now, I don't want to talk anymore.
Go take new sales orders, so as not to damage your precious cash flow!"
"Yes! If this is the case, our sales orders will decrease, and won't the production scale be reduced accordingly?" Niu Xiaobai also agreed.
"Manager Niu, to tell you the truth, I am considering reducing the company's production scale.
To alleviate the current pressure on cash flow." Chen Wanshi replied calmly.
"Ah?!" All the managers present opened their mouths in unison and looked at Chen Wanshi in surprise. According to everyone's traditional understanding, every general manager in any company hopes to increase sales performance to facilitate expansion.
Production scale, using the effect of economies of scale to create more profits for the company, thereby growing the company. Now as the general manager of Fuma Company, Chen Wanshi is actually considering reducing the company's production scale! What is going on?
At this time, Chen Wanshi still had that calm expression on her pretty face: "Managers, according to Fuma Company's previous practices, in order to obtain more sales orders, no matter what the other party gives,
We blindly accepted the payment terms without considering the company's actual cash flow capabilities."
She looked around and explained calmly: "Let me give you an example. The payment terms of LYT Company are six months, and there is no advance payment. On the surface, TY Company's sales are very huge, but the profit margin is not
High. If you take into account the interest and utilization rate of funds, their business is basically a loss-making business from a financial point of view. They lose their capital and make a profit, and they also accumulate a lot of precious cash flow! In the case of sufficient funds,
, no one has ever considered this issue; but it is different now. The cash flow on our company's books is getting tighter and tighter, and we must control it. Otherwise, our company will be reduced to having no money to pay wages and no money.
To the point of buying raw materials!”
There was a silence in the conference room.
Slowly, the managers began to talk in groups with their heads down. Although some people still said that the corner had not been turned yet, most people began to agree with Chen Wanshi's statement.
Chen Wanshi watched everyone's discussion quietly. When everyone stopped speaking, she looked at the logistics and purchasing manager Jiang Xiaowei and said: "Manager Jiang, my request to your logistics and purchasing department is to reduce unnecessary waste as much as possible.
Necessary raw material procurement! Every dollar less in raw material inventory is equivalent to an extra dollar in cash. Also, negotiate with your suppliers as much as possible to obtain the most favorable payment terms, and you can pay less in advance
Just pay a little less, and pay a little later for the balance of the goods if you can!"
Chen Wanshi paused and continued: "For those 'old customers' who have not been able to settle the balance so far, please go and find out, Manager Jiang, and see if their company can provide the raw materials or services we need."
.If so, give priority to purchasing raw materials or services from them, and use their accounts receivable to offset our accounts payable..."
Jiang Xiaowei listened attentively while taking notes seriously, and occasionally nodded his head in agreement. When Chen Wanshi had finished speaking, Jiang Xiaowei said formally: "General manager, please rest assured, the logistics and purchasing department will
I will fully cooperate with your guidelines and policies and do a good job in cash flow management!"
Jiang Xiaowei's perfect performance of loyalty was witnessed by everyone. Many people smiled knowingly, and some even quietly gave a thumbs up and joked in a low voice: "It is true that those who know the current affairs are heroes! Jiang Xiaowei
, it is indeed a human spirit!”
After talking about the logistics and purchasing department, Chen Wanshi followed up
Said to Niu Xiaobai: "As I told you before, the machining shop must effectively compress the inventory of production in progress to save precious cash flow..."
After Chen Wanshi made some arrangements for other departments, she finally concluded: "Our finance department has formulated three very important indicators to monitor the cash flow situation: the 'repayment period' is used to measure the company's actual use.
How long does it take to collect accounts; use 'inventory turnover rate' to measure the time our company's inventory takes up operating costs and cash flow; use 'payment period' to measure the time the company takes from receiving goods to paying suppliers.
I would like to remind all the managers here again that these three indicators are not just a matter for the finance department or a certain department, but require the cooperation of all departments to strictly implement our financial supervision mechanism."
I noticed that everyone looked at me and I looked at you with confused expressions. Dong Xiaoya knew that many people, like her, did not completely understand what Chen Wanshi said just now.
Dong Xiaoya cleared her throat, raised her voice and asked, "I'm talking to General Manager Chen, can you give us a detailed introduction to what you call the 'financial supervision mechanism' and what exactly you are required to do?"
Chen Wanshi nodded approvingly and said loudly with a calm face: "The question asked by Manager Dong is very good! Managers, in the future work, if you don't understand anything I say, please tell me
Feel free to ask questions boldly, and I will answer you in detail. If you don’t understand my intention clearly, you will definitely be confused during the implementation process. My answer to Manager Dong’s question is as follows.”
First, the procurement business must be closely monitored. The Logistics and Procurement Department must accurately arrange the time of cash payments to minimize unnecessary cash flow expenditures. This task is specifically responsible for this task by Manager Jiang Xiaowei of the Logistics and Procurement Department;
Second, closely monitor the recovery of accounts receivable. In order to speed up the flow of cash flow, we should strengthen the collection of accounts receivable. This work is led by the Finance Department and coordinated by the Sales Department; if legal matters are required,
The human resources department is responsible for cooperation;
Third, strengthen the management and control of work-in-process inventory and find ways to reduce the quantity and cost of production work-in-process. This task is the responsibility of Manager Niu of the machining workshop and Manager Hu of the assembly workshop;
Fourth, it is necessary to control cash flow by all employees, strengthen the awareness of all employees to participate in cash flow management, and conduct pre-prediction, in-process supervision, and post-event analysis for each cash flow;
Fifth, the Finance Department combines cash flow management objectives to influence and regulate the activities of the Finance Department in all aspects to avoid financial risks and improve the liquidity and profitability of cash assets;
sixth,……
…
After the meeting lasted for nearly two hours, it finally ended. Most people had left, and only Niu Xiaobai and Dong Xiaoya were left chatting in the conference room.
Dong Xiaoya slammed the table and said angrily: "This Chen Wanshi! Isn't it because the cash flow is not enough? Can't it be over if she asks her father to allocate more money? Why do you make everyone so nervous? Obviously
A problem that can be solved with money requires us to tighten our belts, so what is she thinking?"