Cash Flow Management: Your Business’s Life Blood

• Imagine Your Piggy Bank: Cash flow is like the money in your piggy bank. You get money (income) from allowances or gifts, and you spend money (expenses) on toys or snacks. Keeping your piggy bank healthy is important so you always have enough to buy what you want. Businesses need to do the same thing!
• Why it Matters: Companies need to know how much money they have coming in and going out. This helps them avoid running out of money to pay for things like buying supplies, paying workers, and even buying cool new things to make their products!

Accounts Receivable (AR): Money You’re Waiting On

• This is like when you lend your friend money for lunch and they promise to pay you back Friday. That money you’re waiting for is your Accounts Receivable!
• Businesses sell stuff to customers, but sometimes customers don’t pay right away. That money owed to the business is AR.
• Managing AR: Companies need to keep track of who owes money and remind them to pay, kind of like you’d remind your friend about that lunch money!

Accounts Payable (AP): Money You Owe

• Like how you might owe your parents money for that cool new game, businesses sometimes buy things they’ll pay for later. That’s Accounts Payable!
• Managing AP: Companies have to keep track of their bills and pay them on time to avoid late fees (just like you don’t want to get in trouble for not paying back your parents!).

ERP Systems for Cash Flow

• Imagine an ERP system like a giant organizer for your company’s piggy bank.
• It helps keep track of:
  • Money coming in from customers (like when your friend pays back their lunch money).
  • Money going out to pay bills (like when you buy that game).
• You can see all the “money in” and “money out” clearly so you know how much is in the piggy bank at all times!

Sales Forecasting: Predicting the Future (Sort Of)

• The Crystal Ball of Business: Sales forecasting is like trying to guess how many cookies you’ll sell at a bake sale. You look at how you did last year, whether a new cookie is popular, and even the weather forecast! Businesses do the same to predict how much they’ll sell in the future.
• Why It Matters: If you think you’ll sell tons of cookies, you’ll buy lots of ingredients. The same is true for businesses! Good forecasts help them:
  • Make enough products.
  • Have enough staff.
  • Plan for buying new equipment if needed.

Different Forecasting Models:

• Simple Guessing: Looking at last year’s sales and adding or subtracting a bit.
• Trend Analysis: Looking for patterns (like if sales go up every summer).
• Fancy Math: Using complicated formulas and historical data.

• Forecasting and Your Piggy Bank: Knowing how much you MIGHT sell helps predict how much money will come into your piggy bank in the future!

ERP Systems for Sales Forecasting

• ERPs store lots of information about past sales. Think of it like a super diary of every cookie you’ve ever sold!
• It can use this information to help make those sales predictions, making your guess about how many cookies to bake much more accurate.

Example: Let’s Sell Lemonade!

1. Cash Flow:
   • You buy lemons, sugar, and cups (Accounts Payable).
   • Customers buy lemonade and pay you (Accounts Receivable).
   • Your ERP tracks every penny in and out!
2. Sales Forecasting
   • Last summer you sold 50 cups each day.
   • This year, there’s a heatwave predicted! Maybe you’ll sell 70 per day.
   • Your ERP can use past sales and other info to help with the guess.