CASHFLOW. Strategy, Budgets, forecasting

Transcription

1 CASHFLOW Strategy, s, forecasting

2 So what are we talking about? Cashflow Cash inflows and cash outflows for a business over a specified period Cash budget Estimation of cash inflows and cash outflows for a business over a specified period

3 Cash is Understanding a business s cashflow trends, sources and applications is one of management s key business strategies and controls (cash is king).

4 Why is Cashflow, budgeting and forecasting so important Ascertain/assist whether a company s operations will provide a sufficient amount of cash to meet projected cash requirements. Identify opportunities Maximise investment opportunities Cash investments Capital investment Operations investments

5 Potential Issues Potential issues which can arise from poor cashflow management and cash forecasting include, but are not limited to: Inability to meet and pay wages Unable to (or not knowing if) the organisation can meet debts as they fall due (insufficient cash or availability of operating cash) Adverse operational matters are not identified promptly via fluctuations to anticipated cash inflows and outflows. This can affect the ability to identify and address inefficient practices in a timely manner. Favourable operational matters are not identified promptly to provide opportunities to capitalise on efficiencies.

6 AGENCY NAME: Audited Results Previous Year (Audited) Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Annual INCOME STATEMENT (MONTHLY) 1 REVENUE (Negative Figures) 2 Government Contributions/Grants 3 Department of Human Services $ , ,612 4 Non Cash Revenue from Services Provided (LSL) $ Other Victorian State Government $ Commonwealth Grants $ ,754-34,754 7 Indirect Contributions by Human Services (insurance) $ Total Government Revenue $0-26,743-27,208-26,231-27,924-28,143-27,559-28,255-25,794-28,395-29,528-28,690-31, , ,366 9 Other Revenue 10 Patient/Resident Fees (Note 4) $ ,688-31, Donations and Bequests $ Recoupment Hospital Facilities - Private Practice $ Interest & Dividends $ Research Revenue - Non Government $ Other $ ,451-74, Total Other Revenue $ , , Transfer Pricing Accounts - Revenue Specific Revenue (Note 3) 0 19 Proceeds from Sale of Non Current Assets $ , Total Revenue $0-35,198-36,101-35,692-36,792-36,814-36,363-36,411-34,505-37,350-38,127-38,105-40, , , , EXPENSES (Positive Figures) 22 Employee Benefits 23 Salaries and Wages (Note 1) 24 Basic $ , , Sick pay ,047 8, Overtime ,804 4, Penalties ,403 13, Allowances ,917 13, Workcover Departure Expenditure $ Other Salaries and Wages ,732-1, Fee for Service ,667 10, Nurse Agency Expense Other Agency Expense/External Contract Staff $ ,468 1, Employee Entitlements $ ,070 32, Superannuation $ ,436 24, Workcover Premium $ ,006 3, Total Employee Entitlement $0 24,328 25,037 23,909 25,674 24,559 24,794 25,499 23,006 25,526 26,888 26,272 25, , , Supplies and Consumables 40 Drug Supplies $0 1,626 1,663 1,659 1,838 1,622 1,567 1,245 1,515 1,648 1,574 1,807 2,056 19,821 19, Medical and Surgical Supplies Including Prostheses $0 1,651 1,697 1,668 1,637 1,647 1,589 1,246 1,553 1,681 1,609 1,825 2,169 19,971 19, Food Supplies and Services $ ,362 3, Pathology Supplies and Services $ ,215 3, Other Supplies & Consumables $0 1,631 1,667 1,646 1,649 1,646 1,649 1,649 1,639 1,650 1,646 1,649 3,775 21,896 21, Total Supplies & Consumables $0 5,452 5,573 5,516 5,672 5,468 5,360 4,687 5,229 5,550 5,373 5,835 8,550 68, , Other Expenses 47 Domestic Services and Supplies $ ,597 3, Fuel, Light, Power and Water $ ,977 6,977 Repairs and Maintenance (excluding Maintenance 49 Contracts) $ ,572 1, Maintenance Contracts $ ,637 4, Operating Leases $ Administrative Expenses $0 1,130 1,236 1,129 1,168 1,202 1,200 1,125 1,179 1,231 1,123 1,208 1,268 14,199 14, Other Expenses $0 3,176 3,177 4,004 3,192 3,189 3,343 3,447 3,476 3,448 3,257 3,243 3,421 40,373 40, Total Other Expenses $0 5,621 5,719 6,445 5,834 5,832 6,095 6,098 6,114 6,181 5,813 5,896 6,186 71, , Internal Allocations - Transfer Pricing Patient Expenses 0 0 Internal Allocations - Transfer Pricing Non-Patient 56 Expenses Specific Expense (Note 3) 0 58 Depreciation and Amortisation $ Devaluation of Assets 0 60 Written Down Value of Assets Sold , Total Expenses $0 35,401 36,329 35,870 37,180 35,858 36,249 36,284 34,349 37,257 38,074 38,003 40, , , , Operating Surplus(-)/Deficit $ Internal Allocation - Transfer Pricing Depreciation

7 Know what you have to spend - helicopter view Cash Position as at 31 August 2017 Total Cash and investments $9.5m Less: Restricted Funds - Capex $2.9m Restricted Funds - Patient Trusts $0.9m Restricted Funds - other $1.9m Underlying cash Surplus $3.8m

8 ALWAYS KNOW YOUR CASH POSITION Determine your cash position.. Total cash Trust funds Restricted cash Loans Captial Commitments Etc etc etc. (the detail is dependant on the current state of play)

9 Where to start.. 1. Preliminary - Strategy 2. (monthly) 3. Identify timing variances 4. Balance and align to strategy 5. Monitor 6. Realignment 7. Reporting

10 1. Preliminary - Stategy Highlevel snapshot of where cash should end up Ability to consider non-operating cash movements Ability to realign budgets to ensure viability

11 Valle Baroni Health - Summary Cash Forecast to 30 June 2018 Opening Balance 1 July 2017 $ '000 $ '000 Bank and Cash on Hand 9,886 Investments at Call 633 Monies in Trust Net Opening Cash 23,062 Forecast Statement of Priorities Result FY 2017/18 1,005 Subtotal Cash before Capital Expenditure & SPF's 24,067 Less: Capital Expendure C/Fwd Capex - but not spent (2,768) less Capex c/fwd to 2017/ Initital Capital Allocation FY17 (500) Aged - Annual Provisions (38) SOHS - Infrastructure and Medical Equipment Replacement (220) EMR Inflows - State 10,000 Inflow - State Loan 2,000 Expenditure (14,000) Redevelopment Works Inflows 2500 Expenditure (2,500) (1,950) Resident Services Works Inflows 1,000 Expenditure (1,000) Total Capital Expenditure (6,976) Other Cash inflows/(outflows) Movement in accrued expenses & payables (2,500) Payrol Accrual not paid till FY PYA 291 Consortia funds movements (570) Property Sales 925 Aged Care RAD/Bonds increase 2,500 Community Packages - trust monies expenditure (625) 621 Closing Cash before SPF's & Other Tied Funds 17,712 Less Estimated SPF & Other Tied Funds requirement as at 30 June 2018 (6,355) Restricted (17,206) Unrestricted (10,278) (27,484) Forecast Cash Support Requirement - to fully replenish SPF's (9,772) LY $(12003) Notes: Closing Balance SPF and other tied funds as at 30 June ,687 Cash excludes investment in LMRHA Joint Venture.

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13 2. Any new business iniatiaves & strategies should already be incorporated in the budget build process, including additional revenues, staffing FTE, capital expenditures etc.

14 3. Identify timing variances Salaries & wages (inc. public hol s, 3 pay mths) Workcover Insurances Software Licences Capital Purchases (and disposals) Leasing and loan repayments Grant revenue *****

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16 3. Balance & Align Balance Align to Stategy Tweek Review ratios Compare to current run rates (all balance sheet items) Sanity checks does it make sense month to month? Is it realistic? Is it feasiable/sustainable? eg. Do we need DHHS assistance to pay wages in Dec/Jan?

17 5. Monitor Track how we are tracking against budgets and forecast Enables maximization of interest revenue

18 5. Monitor Cash Flows from (used in) Operating Activities Actual Forecast July August September October November December January February March April May June Total Monthly $ 000 Monthly $ 000 Monthly $ 000 Monthly $ 000 Monthly $ 000 Monthly $ 000 Monthly $ 000 Monthly $ 000 Monthly $ 000 Monthly $ 000 Monthly $ 000 Monthly $ 000 $ 000 ORIGINAL Variance Receipts 1 DHHS Government Grants ,610 22,441 15,646 32,986 20,511 24,351 3,938 21, , Other Victorian State Government Grants Commonwealth Grants ,873 2,929 2,929 2,761 2,929 2,873 2,929 2, ,754 5,345 4 Capital Grants : State Government ,705 1,755 2,415 5, , Capital Grants: Commonwealth Patient/Resident Fees ,607 3, ,812 2,453 2,522 2,698 2, , Other Receipts ,619 7,380 3,304 7,616 2,268 5,576 11,373 7, , Total Receipts Payments 0 9 Employee Entitlements ,830 21,567 23,277 19,481 23,032 21,445 33,025 20, , Non-Salary Labour Costs ,500 1,500 1,500 1,500 1,500 1,500 1,500 1, , Supplies and Consumables Other Payments ,189 3,343 3,447 3,476 3,448 3,257 3,243 3, ,373 5, Total Payments Net 14Cash Flows From (Used In) Operating Activities Money Held by controlled entities - Net Cash Flows from Operating 0 Activities Cash Flows From (Used In) Investing Activities 16 Purchase of Properties, Plant & Equipment - Government Funded Purchase of Properties, Plant & Equipment - Internally Funded Proceeds from Sale of Properties, Plant & Equipment Purchase of Investments Proceeds from Sale of Investments Other Capital Income Net 22Cash Flows From (Used In) Investing Activities Money Held by controlled entities - Net Cash Flows from Investing 0 Activities Cash Flows From (Used In) Financing Activities 0 24 Proceeds from Borrowings Repayment of Borrowings Contributed Capital from Government Contributed Capital Returned to Government Net 28 Cash Flows From (Used In) Financial Activities Money Held by controlled entities - Net Cash Flows from Financing 0 Activities Net Increase/Decrease in Cash Held Money Held by controlled entities - Net Cash Increase/Decrease in Cash Held Cash at Beginning of Period Cash at End of Period Note 1: The Statement provides information on actual cash flows for the financial year. 0 check

19 5. Monitor CASH FORECAST CASHFLOW IS FROM FRIDAY TO THURSDAY FORECAST CASH ACTUAL CASH Variance Operatin 1/11/2018 Brought Forward $18,004,480 $18,004,480 $0 Deposits Expected Dept. Capital Claims $0 0 $0 SAMS $300,000 $312,904 $12,904 Aged Care/ NH Benefits $1,000,000 $1,147,888 ($761,243) PBS Drug Claim $150,000 $238,757 $88,757 General Weekly Deposits $850,000 $814,930 ($35,070) $2,300,000 $2,514,480 $214,480 Cash Outflows Payment Runs: Weekly Cheque/EFT run ($1,000,000) ($918,930) $81,070 Other - Direct Debits $0 $0 Sal & Wages N ($8,000,000) ($7,899,625) $100,375 Monthly Cheque/EFT run (SEPTEMBER) ($5,300,000) ($5,219,090) ($14,300,000) ($14,037,645) $262,355 Closing Operating Cash Balance as at 7/11/2018 $6,004,480 $6,481,314 $476,835 Operatin 8/11/2018 $6,400,748 $6,400,748 $0 Deposits Expected Dept. Acute/Subacute Cashflow funding 12/11/13 $16,000,000 $17,797,784 $1,797,784 Capital Claims $0 $0 $0 Dental $300,000 $284,793 ($15,207) PBS Drug Claim $150,000 $161,354 $11,354 General Weekly Deposits $850,000 $1,324,487 $474,487 $17,300,000 $19,568,418 $2,268,418 Cash Outflows Payment Runs: Weekly Cheque/EFT run ($1,000,000) ($277,457) $722,543 Other - Direct Debits $0 ($24,807) ($24,807) Sal & Wages Salaries Advance ($50,000) ($49,820) $180 ($1,050,000) ($352,084) $697,916 Closing Operating Cash Balance as at 14/11/2018 $22,650,748 $25,617,082 $2,966,334 Operatin 15/11/2018 $25,693,022 $25,693,022 $0 Deposits Expected Dept. Capital Claims $0 $156,037 $156,037 Aged Care $200,000 $294,197 PBS Drug Claim $150,000 $194,408 $44,408 General Weekly Deposits $850,000 $1,073,700 $223,700 $1,200,000 $1,718,343 $518,343 Cash Outflows Payment Runs: Weekly Cheque/EFT run ($1,000,000) ($617,730) $382,270 Other - Direct Debits ($46,000) ($57,844) ($11,844) Sal & Wages N ($8,000,000) ($7,709,816) $290,184 ($9,046,000) ($8,385,390) $660,610 Closing Operating Cash Balance as at 21/11/2018 $17,847,022 $19,025,975 $1,178,953 Operatin 22/11/2018 $19,009,955 $19,009,955 $0 Deposits Expected Dept. Capital Claims $0 $0 PBS Drug Claim $150,000 $203,835 $53,835 BAS Payment $500,000 $483,452 ($16,548) General Weekly Deposits $850,000 $1,276,876 $426,876 $1,500,000 $1,964,163 $464,163 Cash OuPayment Runs: Weekly Cheque/EFT run ($1,000,000) ($1,728,142) ($728,142) Other- Direct Debits $0 $0 $0 Sal & Wages Salaries Advance/EOM Deductions ($500,000) ($501,042) ($1,042) ($1,500,000) ($2,229,184) ($729,184) Closing Operating Cash Balance as at 28/11/2018 $19,009,955 $18,744,934 ($265,021) TOTAL CASH & INVESOperating Funds Available $18,726,587 $18,726,587 $18,726,587 Term Deposits 9,046,216 Non Operating Funds (JV) 0 Total Cash & Investments 27,772,803 Tied Funds 18,617,748 Forecast Cash Support Requirement $9,155,055

20 6. Realignment Understand your fluctuations from budget Identify changes to future forecasts Realign be realistic

21 7. Reporting Develop cash reporting Identify available/shortfalls in cash Variance Reporting Variance reporting is a key reporting technique in which analysis is performed to determine how a department is performing against predetermined targets, the most obvious of these being the budget. NO SURPRISES

22 Key Messages The important keys to Variance Analysis are: Planning set and allow plenty of time to review and analyse. Don t leave it to the last minute. Knowledge know your business and the trends and fluctuations which occur within it. Know the factors that impact upon the performance of your business. Duties understand the duties and roles of each employee and the expectation of each to achieve the targets set within the budget. Communication discuss variances with key personnel eg. Business Managers & Directors.

23 Questions

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