Now Everyone Can Prepare Daily Cash Flow Report - Sample Chapter 1.0

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

mailto:[email protected]

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.


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









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









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









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


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


Suppliers 15,000.00 15,000.00


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









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.









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


Others 9,500.00 9,500.00

0.00

TOTAL RECEIPTS 9,500.00 52,000.00 14,000.00 75,500.00

PAYMENTS


Suppliers 5,500.00 5,500.00


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









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 !!








Thank you



Documents

Now Everyone Can Prepare Daily Cash Flow Report - Sample Chapter 1.0