Page 153 - Agri-Business Management Handbook

Element Possible Strategies Caution
Cash
Prepare a plan for the cash Cash management
inflows and outflows. techniques are the end
result of the management
Accelerate cash inflows. strategies of the other
elements of working
Decelerate cash outflows. capital.

Invest surplus cash in bank
deposits and treasury bills.

Ensure that you consider
cheques that you have issued
as cash out even when such
cheques have not been cashed
by the payee.

Use bank overdrafts only when it
is extremely necessary.

CHAPTER SUMMARY

01 Finance is concerned with raising funds and deploying those funds to
the various uses for long-term sustainability of the business.

02 Sources of business finance can be internal (within the business) or
external (outside the business). Internal sources include; savings,

reducing inventory levels, adopting tighter credit policies and delaying

payment to suppliers. External sources include; issuing new shares, term

loans, mortgages, finance leases, sale and lease back, bank overdrafts

and business angels.

Every business must plan for the profits that it intends to achieve by
03 considering its structure of fixed and variable costs. Profits are only made

after covering both the variable and fixed costs.

04 The point at which no profit or loss is made is called the breakeven point.

05 Liquidity management is the planning and management of working
capital (current assets less current liabilities).

06 Working capital should be maintained at optimum levels that reflect the
operating cycle.

96 | AGRI-BUSINESS MANAGEMENT HANDBOOK