WORKING CAPITAL MANAGEMENT

Managing Working Capital & Financing

(An Analysis of Cash Flow in a Business)



Table of Contents

Executive Summary1

Introduction2

Research4

Findings7

Conclusion & Recommendations14

Post Report Reflection17

Bibliography20

Appendix -123

Appendix -225

Executive Summary

Working capital management is a strong focus of financial managers in every company. It is the cash flows that form a major component of the company's funds and hence, this needs to be carefully evaluated and controlled. A right cash flow in any business is a vital need for its survival. In a company where operations flows come with limited margins, and in the course of a commission structure, this becomes the most important factor for the business. We believe that the introduction of practice effective management of working capital provides an opportunity to improve business management system in general, improve the system for assessing effectiveness inexpediency of the activity, increase the responsibility of leadership- properties for their performance, and enhance the reputation of the organization and the trust of shareholders, partners and other interested parties. This report analyses how working capital managed, and how various forms of financing are available to help in the cash flow of the business. Throughout this report, all accounting concepts are accessed to analyze how Ubique Systems is handling its operation, given the limited options available.

Introduction

This report is focused on the significance of cash flows for an organization, particularly for the one that deals with the commission structure. For the purpose of this report-based study, we choose a software development and consulting company, Ubique Systems UK Ltd. Ubique System is a medium sized company that commenced its operations in the year 2000. While software development arm has been quite strong in the recent past, consulting arena has been the main specialty in the recent years. Ubique Systems UK Ltd has also established its offices in India, South Africa, Singapore, Netherlands and recently Denmark. The parent company has also been changed from UK to India in 2009 to help Ubique brand name grow and establish its portfolio throughout the globe. Nevertheless Ubique UK has been the strongest arm of Ubique Systems consortium and it continues to subsidies other offices and helps them grow. In the recent past Ubique Systems UK has its turnover of £4.4M, £3.1M and £4.1M in 2009, 2010 and 2011 respectively. This report is limited to UK branch of Ubique Systems only.

The company in focus, in its simplistic form, deals with a business that is commission-based recruitment and fulfillment. The company does not have the financial capital to have a large number of consultants employed permanently to supply to the clients. In turn, they provide the consultants from the market to clients and negotiate a deal on each and every case generating a margin on every consultant that is selected. Ubique keeps a margin of 10% per day and passes a rate of £360 to them.

Another highlight of contracting is that it is all invoicing based and billed in arrears. This means that work for a particular month is billed at the beginning of next ...