Liquidity Management and Cash flow forecasting for SMEs

One of the significant lessons learned from the Covid crisis and its aftermath is the importance of good liquidity management for the survival and growth of the SMES. Recognizing this need, JBS has taken the initiative to prepare a targeted and timely training module for bankers that are involved in the SME business area.

This programme focuses on the importance of cash generation and liquidity for the long-term, it allows the SME banker to understand how SMEs should be managing their liquidity and their cash flows to be able to honour their debt repayments. We will also review the application of cash flow forecasting in terms of risk sensitivity and in terms of debt structuring and corporate valuations. As part of this course, the delegates will be shown how to create their own SME cash flow forecasts in excel, for use in credit risk analysis.

• Reviewing the current economic climate in terms of the company’s liquidity challenges
• Understanding why in business, cash and liquidity are essential to the successful survival and development of the business
• Assessing the difference between profit and cash flow and how that is reflected in the accounts
• Reviewing key factors and ratios used in assessing the SMEs liquidity
• Reviewing different methods in which SMEs can improve their sources of liquidity
• Analysing the importance of cash flow in terms of the SMEs ability to honour its debts
• Reviewing how to create a cash flow for the SME from the company’s Income Statement and Balance Sheet
• Using the cash flow statement to assess movements in company liquidity in recent periods and whether cash flow creation is sustainable or not
• Introducing the delegates to the creation of cash flow forecasts in excel.
• Using cash flow forecasts to understand the sensitivity of the company’s ability to honour its debt repayments in the event of risk crystallisation
• Using cash flow and the Debt Service Coverage Ratio to structure debts for the SME company.
• Using discounted cash flows to assess the value of the business when the bankers take the SME shares as part of its security package.