Cash Flow Management

Cash Flow Management Considerations Activity

In making implementation decisions for Kudler Fine Foods, the cash flow management strategies should aim to increase the net profit. This can be accomplished by cutting down on unnecessary overhead expenditures, keeping tabs on inventory, reviewing the owner’s compensation, keeping an up-to-date projected cash flow budget, and developing a good record keeping system. The primary focus, of Team A’s discussion to lower costs and increase the net profit, is labor. Using the Strategic Plan that is located on the intranet site for Kudler Fine Foods there were focus areas located that will help Kathy Kudler increase her net profit by making adjustments to the current ways they do things, and adding additional services that can bring in revenue. There are two main concepts or changes that should be implemented to help decrease expenses and costs, and in turn the net profit.

The first item would be to make inventory and ordering systems automated this would reduce the time spent currently and that will reduce wages. This change may not have an immediate impact on sales, but it will have an effect on the costs, therefore it will increase the net profit. The next change that should be made is hiring someone with a finance background. This will likely not affect sales, but just like the previous idea it will help cut costs. Someone with a finance background can help manage the financial aspects of the business and make suggestions on where they can make improvements. Adding this individual is imperative as Kathy is looking to grow her business through catering and additional stores, and she will want to make sure her financial business is in line before going through this type of expansion. After reviewing Kudler’s income statement, it is apparent that purchases, direct labor, and wages are the largest areas of expense, and perhaps costs could be cut in these areas. Of course, when trying to lower direct labor costs...