CASH MANAGEMENT THAT IMPROVES THE LIQUIDITY SITUATION OF

RANCON Developments Ltd.

Prepared by
Afroza Akter Rubi
ID: 181011156

Supervised by
Abu Saad Md. Masnun Al Mahi
Assistant Professor

Submitted in Partial Fulfillment of the Requirements for the Degree

Bachelor of Business Administration

26 December, 22

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 Letter of Transmittal

26 December 2022

Abu Saad Md. Masnun Al Mahi

Assistant Professor
University of Liberal Arts Bangladesh

Subject: Submission of Internship Report.

Dear Sir,
This is to inform you that I am completing my internship program at RANCON Developments Ltd. The
internship report has been prepared for my internship experience as per the requirements of my
undergraduate BBA program at the University of Liberal Arts Bangladesh. In writing this paper, I have
tried my best to apply the concepts and knowledge from assigned tasks in my internship period with the
company. I have reflected in this report what I am doing per the company’s requirement and presented
them with a research approach to make the reporting standard. However, I will be glad to clarify any
discrepancy that may arise in this report. I hope this report will entice your kind appreciation.

Therefore, I wish and hope that you would be kind enough to accept my efforts and oblige thereby.

Sincerely yours,
Afroza Akter Rubi
ID - 181011156
University of Liberal Arts Bangladesh

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 Executive Summary

This report is a combination of three months internship program in RANCON Developments

Ltd. As an intern at RANCON Developments Ltd., this internship report has been prepared.
This report aims toward providing an overview of the “Cash management that improves the
liquidity situation in RANCON Developments Ltd.”. In the first chapter of PART A, I
mentioned my motivation to do the internship and what my plan is to learn from this are
discussed. My internship search process, e.g., how I applied and managed to secure an
internship in this organization. Why I chose this organization is also mentioned at this stage.
My internship interview experience is also mentioned. Relevant information about the
organization, e.g., its type, size, industry, business focus, etc. is provided in this chapter. In
the second chapter, my position is described and a detailed description of my office, work
environment, and everyday job duties and responsibilities as an intern with the company is
mentioned. The specific things I learned, skills I employed in carrying out my jobs, new skills
acquired from my job, and the contributions I made to the company are highlighted.  My
educational learning with my internship roles and responsibilities are related. The things that
I liked and disliked about my internship at that organization are highlighted. In chapter three,
how I could do better and how could the organization utilize me better is also discussed in
this chapter. My insights into things I want to continue working on for my next position while
recommending ways the organization can improve its internship program are also presented.
Lastly, in chapter four, a brief personal development plan highlighting my next course of
action and career plan is provided. What technical and interpersonal skills I want to develop
at present for securing employment/career is also discussed in this chapter.

The first chapter of PART B is an introduction, which describes the background information
about cash management and RANCON Developments Ltd., to then progress to the research
questions of this study. In chapter two, the methodology of the study is discussed. Lastly, the
report ends with the findings of the output in chapter three. Followed by some possible
recommendations on how to fill up those lacking. At the end of the report, the conclusion,
references, and appendix have been added which made the report a reliable one.

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 Table of Contents

PART A

Chapter 1: Internship Preparation ...........................................................................................................6-7

Chapter 2: About the Internship..............................................................................................................7-8
Chapter 3: Self-Reflection .........................................................................................................................9
Chapter 4: Personal Development Plan....................................................................................................10

Part B

CHAPTER 1: Introduction…………………………………………...……11-12
1.1.
Introduction........................................................................................................................................11
1.2. Purpose………………......................................................................................................................11
1.3. Background of the Study .............................................................................................................11-12
1.4. Problem Statement………………………………………………………………………………….12

Chapter 2: Methodology…………………………………………………………………………...13-14
2.1. Research Design................................................................................................................................13
2.2. Description of Data ...........................................................................................................................13
2.3. Primary Data…………………………………..................................................................................13
2.4. Secondary Data……………………………………………………………………………………..13
2.5. Sampling
Method…………………………………………………………………………………...13 2.6.
Sampling Selection Procedure……………………………………………………………………...14 2.7.
Sample Size………………………………………………………………………………………...14 2.8.
Quantitative or Qualitative Approach………………………………………………………………14

Chapter 3: Findings & Discussion………………………………………………………………...15-22

3.1. Restricted Capital……………………………………………………………………………….15-16
3.2. Payments……………………………………………………………………………………………16
3.2.1. Sales Ledger………………………………………………………………………………………
16 2.2.2 Analysis of Financial
Statement……………………………………………………………….16-18 3.2.3 Term of

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Payment………………………………………………………………………………….18 3.2.4.
Improvement on Order/Billing Routines……………………………………………………...18-19 3.2.5.
Interest-bearing…………………………………………………………………………………...19 3.3.
Payouts……………………………………………………………………………………………20 3.4.
Liquidity Management………………………………………………………………………….20-21
3.4.1. Liquidity Budget………………………………………………………………………………….21
3.4.2. Liquidity Reserve…………………………………………………………………………………
21 3.5. Short-term
Financing……………………………………………………………………………….21 3.5.1.
Factoring………………………………………………………………………………………….22 3.5.2.
Leasing……………………………………………………………………………………………22

Chapter 4: Recommendation………………………………………………………………………….23

Chapter 5: Conclusion……………………………………………………………………...24
References …………………………………………………………………………………………25-27
Appendix…………………………………………………………………………………………….28-31

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 PART A
Chapter 1: Internship Preparation

In the current atmosphere, securing that essential postgraduate career chance no longer requires a
respectable degree. Today, having relevant work experience is just as crucial to starting a successful
career as having a bachelor's degree and strong exam scores. As a result, internships are now a vital
opportunity for individuals to differentiate themselves. Many studies have shown the value of an
internship. Organizations today place a great emphasis on portfolios that also include significant work
experience gained through paid work, volunteer work, or internships at a corporation. Gaining work
experience is essential for recent graduates trying to launch their careers. It is best to start building your
experience as soon as possible.

It will instruct me on how and where to put my new knowledge and abilities to use. I will gain from
your giving me organizational advantages. Through an internship, I will gain a better grasp of office
culture, which will help me feel more at ease when I start working a real full-time job. I've grown to
understand how crucial journaling is for both my personal and professional growth. I hope to be able to
maintain my great interpersonal skills from my internship because they are crucial for my professional
progress. Accepting feedback will be beneficial to me since it will enable me to assess my effort and
productivity at work and identify areas where I may improve to do even better in the future.

I initially started searching for areas, companies, or organizations in my industry where internship
positions were available. I quickly began accumulating a variety of potential internship alternatives. I
made a market-ready résumé to grab recruiting managers' attention at companies. I merely answered all
of the job postings for those companies that I came across on Facebook, LinkedIn, BD Jobs, and other
internet job search engines. After being selected for the interview, I started preparing for the Q&A
session, and I then went on to do the interviews with the companies. To develop and improve my
speaking abilities, I can refine my interviewing technique and receive feedback through mock
interviews. Planning and working out helped me gain confidence. Think about suggestions, then
respond promptly and appropriately. I evaluated how well the position matched my expectations for my
experience and my professional goals. I discovered from various conversations that startup apprentices
develop a wide range of skills and experience in the workplace. As I see the behind-the-scenes activity,
I will be able to hone my entrepreneurial abilities. An intern will improve their capacity for critical
thought and problem-solving. They will typically be given more freedom to express their uniqueness.

Working for a company allows interns to form closer ties not only with their co-workers but also with
the CEO or co-founders. This may lead to more unconventional mentorship opportunities than working
for a well-known company. When working with companies, an intern will be able to obtain much more
practical expertise in subjects like data analysis and e-commerce.

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I like the internship interview process. While conducting my interview, the CEO and the head of the
business strategy development department were both very helpful. At the office, I was reviewing some
topics a half-hour before the interview time. I was brought into the room and asked for my basic details
after responding to those questions. They looked over my resume and started probing me about it. The
interview was over after 10 to 15 minutes of confidently responding to each question. They promised to
inform me within three to four days once it was finished. They called me after two days to let me know
I had been chosen for the internship and could start at any time.

RANCON Developments Ltd., a company owned by RANCON Group, was founded in 2013.
RANCON Developments Ltd. provides a well-balanced blend of creativity and innovation, driven by
the sincere ideal of perfection and attention to detail. Their unique team of experienced and young
architects and designers, who together champion ground-breaking ideas and represent the best
Bangladesh has to offer, has throughout the years strengthened their determination.

At RANCON Developments Ltd., they work to disrupt the status quo and take that extra, obsessive step
to make sure the details are correct and that each of their clients is given a working art form that is
specially designed to meet their unique demands and wants. They take great pleasure in their ability to
communicate effectively across the table to fully comprehend the specifications of a given project, their
unmatched industry expertise, and their enviable reputation for integrity and fair play.

The company RANCON Developments Ltd. helps students with specialized training and education.

Chapter 2: About the Internship

I am a Junior Executive for Business Development at the company. RANCON Developments Ltd.’s
workplace is very open and transparent. Transparency can mean many different things to different
people. It suggests to me that the management team supports open and honest communication. Workers
are especially encouraged to ask questions about the organization's strategy, finances, and pay. The
company has fairly lax norms and restrictions. Many employees can agree to work from home
occasionally or all the time during a flexible workday. Even though I think some talks are better had in
person, I've always favored working for companies that at least occasionally allow employees to work
from home. A great CEO is essential to the success of any new company, which RANCON
Developments Ltd. has. I think it's a great indication of a solid CEO if employees from their previous
startup have remained with the CEO. That proves they were effective in gaining enough community
trust and goodwill through their earlier efforts to compel those same individuals to work for them again.
It also exhibits their leadership skills. Every member of a startup team needs to feel more assured, in
my opinion. There are many ways to encourage people, but I think positive feedback is crucially
important. If employees are allowed to share any product suggestions they may have, they are more
likely to feel empowered. It could be preferable if there was a formal framework in place for employees
to offer comments within the company. The organization's management team may then take these into
account.

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The area also maintains You might define excellent corporate policy differently than I do. Some of the
things I do look for include anti-discrimination policies, decent maternal leave policies, reasonable sick
leave policies, and appropriate holiday absence regulations.

As an intern, I took part in a range of operations, from client finding and settlement to product
invention and emerging market innovation. The focus of business development is on a range of
marketing techniques, such as sales, market analysis, and long-term strategic planning. My
responsibility was to carry out the tasks that my numerous departmental supervisors had given me when
attending a meeting and taking notes, fulfilling a study request from a supervisor, updating social media
networks, creating wording for postings, writing professional emails, and communicating with
customers. My duties also include calling and emailing clients to schedule meetings and obtain the
necessary data from them. A weekly income report, a monthly revenue target plan, and a google sheet
for any contact updates are all kept up to date.

I learned a range of skills throughout my internship, including making cold calls to target consumers
who are not yet known to me.

I need to be able to make an effective cold call so that I can introduce myself and my company, tell
them why they should consider working with me, and ask them if they have any questions. I was in
charge of generating leads for the sales reps to pursue in my position as an intern. This comprises
contacting them to explain the company's offerings and conducting market research on possible clients.
To achieve this successfully, it is crucial to understand how to conduct good, intended audience
research and what information to include in your messages. My capacity to communicate effectively
has improved, which is essential for business success since it enables me to convince clients to use my
company's services by detailing my goals and plans in detail.

I will be able to stay on top of all of my responsibilities and ensure that I meet any deadlines set by the
company with the help of effective corporate skills. Additionally, I've honed a skill called customer
engagement administration, which is the ability to gain the confidence of customers and ensure their
contentment. This skill will help me build a strong reputation in my industry, which could lead to more
opportunities for company growth. I also developed this customer service management by listening to
my supervisor's advice on how to do a better job or by asking colleagues about their employment
experiences with the company. Roles in finance and marketing frequently overlap. Marketers are
perceived as creative people who do not follow marketing best practices and who are unconcerned with
data or effective marketing. In actuality, their primary objectives are to increase revenue, maintain cash
flow, and make their employer profitable.

In reality, most marketers are only concerned with numbers, revenue, long-term planning, promotional
tactics, and creating client demand. The majority of financial executives are strategic, revenue-focused,
and knowledgeable about marketing channels and social media. The problem was that none of them had
the resources available to manage expenses and funds productively and collaboratively.

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Chapter 3: Self-Reflection

Internships' major objectives are to build relationships, gain experience, and learn new skills. They need
a lot of work and education, but if I can still enjoy doing them, I've made the proper decision. There are
many things about my internship, the work I'm doing, and the people I work with, that I can be thankful
for. In the company, work is not perceived as being difficult. When I am given a task, I am most
grateful for it. For me, everything I do is pleasurable, fascinating, and straightforward. I've genuinely
discussed topics outside of work with my coworkers. We are not bonding if the only topics of
conversation I have with my coworkers are the company, assignments, or other work-related matters.
Because I knew things about my coworkers, I was able to establish relationships with them.

I liked that I was always picking up new ideas. An internship is solely intended to assist you in
developing new skills and applying them to practical assignments. An internship is comparable to a
crash course on working in the real world. I'm learning on the job rather than in a classroom. No of
what I learn during this great internship, learning will always take place.

I was grateful for the supportive mentoring, which is essential when completing an internship. If I want
to build my network and advance in my career, I'll need businesspeople to mentor me and give me
glowing recommendations. A long-lasting career may be paved with the establishment of a trustworthy
source of contacts, such as a boss or even another worker.

RANCON Developments Ltd. allows me to showcase my work. The mentors of the organization can
help me develop a leadership and responsible attitude by giving me a platform to celebrate and be proud
of my successes. Determining whether or not their position has the potential to lead to a job is one of
the most important factors for undergraduates to think about when searching for an internship.

My organization offers prospects for professional growth and stable work, which is an excellent
initiative and essential for children. It will not only give me stability but also the chance to develop in
my position and ultimately in my career.

I might improve if I pay close attention, ask perceptive questions, learn new information, and then
search for additional information to ask perceptive, precise follow-up questions. Increasing my
connections will provide me the chance to communicate with people at all levels, which will improve
my performance. Discover more about my fellow interns, as we will advance in our careers together.
Join community events and groups to get to know the people working in my field. If I am more assured
in my abilities, I might do better.

In essence, an internship is a lengthy interview. Because even though I work in a laid-back setting, I
still need to be conscious of the impressions I make. Being professional doesn't mean that I have to stop

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being myself; it just means that I need to be mindful that certain behaviors and habits that seem
acceptable in a social setting or at school might not be appropriate in a job with a variety of generations.

Chapter 4: Personal Development Plan

After I graduate, I wish to continue my post-graduate studies in another country. It has been
demonstrated that a master's degree can help people advance their skills, reputations, and talents.
Employers see them more favorably, therefore I will have more employment options than if I merely
had a bachelor's degree. Another fantastic advantage is that by selecting the fields in which I'll be
interested in pursuing a long-term career, I'll be able to concentrate and specialize. A postgraduate
degree has become essential in this era of fierce market competition. The market demands of today are
growing swiftly, making the job market competition. Because the only people who can live and work in
this economy are skilled professionals with outstanding academic qualifications. Even a postgraduate
degree, it has been observed, does not appear to be sufficient to qualify a person for their dream job or
position.

To get a job, I need to hone my technical skills, which involve mastering Excel and other spreadsheet
programs. Excel is rightfully regarded as representing significant intellectual progress beyond the
requirements for professional certifications. Since there are so many opportunities to improve the
effectiveness and dependability of corporate processes, it is still worthwhile to invest mental effort in
becoming an experienced user of Excel. There is a huge potential for improving spreadsheet-based
systems, increasing output and quality, reducing the possibility of catastrophic error, and eradicating
crippling inefficiency. If we didn't see its value and potential, it would be harmful to our careers as well
as that of our coworkers and clients. It's also crucial that we acknowledge Excel's significance as a
discipline in and of itself, rather than just as a tool for other professions.

It is impossible to overstate the importance of strong interpersonal skills in the workplace. Their
benefits impact both particular individuals and corporations as a whole. These benefits may include
enhanced camaraderie, increased dependability, and trust, greater creativity through successful
teamwork, effective and efficient task accomplishment, increased passion for a particular endeavor or
position, increased output, opportunities to be exposed to more diverse, satisfying interactions with
other coworkers or clients, opportunities to demonstrate leadership qualities and advancement. One of
the interpersonal skills I need to develop to have a successful profession is the ability to establish clear
communication, whether I'm phoning, writing, or speaking to someone in person. I need to improve my
listening skills and focus more on work. I must produce an empathic reaction that indicates my
comprehension and compassion for their situation to show that I understand what a coworker or client
has said. I need to work on responding positively to other people's talks. Networking and optimism are
the two interpersonal traits that are most crucial for establishing a successful and steady career.

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 PART B

CHAPTER 1: Introduction

1.1. Introduction:

A company owned by RANCON Group, RANCON Developments Ltd. was founded in 2013.
RANCON Developments Ltd. delivers a delicate fusion of creativity and innovation, motivated by the
sincere pursuit of perfection and close attention to detail. Our determination has been strengthened over
the years by our distinctive grouping of young and seasoned architects and designers who together
support cutting-edge concepts and stand for the best that Bangladesh has to offer.

At RANCON Developments Ltd., we work to push the limits and take that extra, obsessive step to
make sure that everything is just right and that each of our clients receives a working art form that is
specially designed to meet their unique demands. We take great pleasure in our ability to communicate
effectively across the table to fully comprehend the specifications of a given project, our superior
industry knowledge, and our track record for moral and impartial behavior.

1.2. Purpose:

The goal is to analyze RANCON Developments Ltd.'s liquidity today to identify later which areas of
cash management can improve RANCON Developments Ltd.'s cash situation.

1.3. Background of the Study:

Originally, the term "cash management" referred to the process of managing money to fulfill daily
obligations (Collins & Jarvis, 2000). Many organizations do not give controlling the firm's liquidity
adequate attention. Financial assets frequently decline as a result of poor cash management
coordination. It might be utilized to invest, for instance, in material, rather than being down. Recent
statistics indicate that small enterprises pay inadequate attention to cash management (Denver, 2005)

Especially for smaller organizations, efficient and effective cash management is crucial for long-term
success (Sardakis et al, 2007). Smaller businesses cannot afford to wait a long time; therefore, this is
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essentially life or death. The amount of cash and near-cash assets kept, as well as the inflows and
outflows of cash, are all considered to be part of cash management (Ekanem, 2010).

There are many elements to consider when trying to improve cash management because it is such a
broad topic. The company and industry determine which elements to consider (Ekanem. 2010). All
businesses still need to be mindful of a few key industries, and this paper discusses those issues.

RANCON Developments Ltd., a company connected to the RANCON Group since 2013, was founded
in 2013. It runs on the straightforward tenets of excellence and meticulousness. All of RANCON
Developments Ltd.’s projects have been executed with a careful balance of creativity and innovation.
Our distinct makeup has strengthened our resolve over the years. The innovative ideas championed by
experienced and young architects and designers together reflect the best Bangladesh has to offer.

To ensure that the details are correct and that each of our clients is presented, RANCON Developments
Ltd. has the authority to challenge the current situation and take that one obsessive further step. They
take great pleasure in their position in this industry. Through the use of cash management principles,
this study paper will analyze and strengthen RANCON Developments Ltd.'s cash situation. Local
building company RANCON Developments Ltd. is situated in Gulshan.

1.4. Problem Statement:

All businesses need to think about cash management. By handling the money properly, the extra money
can be made. I've spotted a chance to work on and present this topic for RANCON Developments Ltd.
The company does not currently have any employees in charge of managing the company's finances,
which is the problem. Through cash management thinking, there is a significant potential to determine
whether the company's liquidity will be more effective.

RANCON Developments Ltd. is not concentrating on cash management, so I examined certain areas

where cash management thinking may be more effective. Getting rid of unused restricted capital is
another factor in the importance of cash management. Building properties is a business that
RANCON Developments Ltd. engages in, which suggests that a sizable sum of money is managed, and
by being effective, there is a sizable sum of money to be earned by investing them appropriately.

Chapter 2: Methodology

The study was conducted solely using my three months of working experience at RANCON
Developments Ltd. Further data is acquired through company corporation profiles, proposals, and
crucial organizational documents. The study's main weakness is that I was unable to access the private
company data because doing so would have violated company policy and revealed the full scope of the
business.

Now that the relevant cash management theories have been given. The purpose of this paper's structure
is to examine the many theoretical components of RANCON Developments Ltd. By doing so, it is
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possible to ascertain how the liquidity is currently managed. Payments, payouts, payment routines,
leasing, factoring, and liquidity management are the primary tenets of the research findings. Based on
the theoretical framework, I will provide some methods to enhance liquidity after outlining how it is
controlled. The main objective is to determine which aspects of cash management can be leveraged to
increase RANCON Developments Ltd.'s liquidity.

The design of this essay is that of a case study. The goal is to have a greater knowledge of how the
company's liquidity is impacted by cash management ideas. This offers me the chance to thoroughly
examine cash management while also coming up with a solution that would work for RANCON
Developments Ltd. The benefit of conducting a case study is that it compels the author to thoroughly
comprehend the topic to decide which components to use for the greatest outcomes.

2.1. Research Design

The study is based on the professional expertise I acquired while working with RANCON
Developments Ltd. via corporate and strategic profiles and important publications, specific data is
acquired.

2.2. Description of Data

In the study, I tried to mix primary and secondary data appropriately.

2.3. Primary Data

Basic data is acquired through a questionnaire filled out by a thorough interview with RANCON
Developments Ltd. CEO Sir and Head of Business Strategies Development. Observing RANCON
Developments Ltd. operations is another source of original data.

2.4. Secondary Data

In contrast to the primary information, secondary information is determined from the pertinent written
works, articles, literature reviews, websites, and publications.

2.5. Sampling Method

For this research, I have used the convenience sampling method, which is a non-probability sampling
technique. This is because the report must be finished by deep data analyses, and since the majority of

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the research's data was acquired through interviews with the CEO and staff of RANCON Developments
Ltd., only a convenience sample method approach could be used.

2.6. Sample Selection Procedure

Key informant interviews were taken into consideration for the study. For this type of study, a
predetermined sample is chosen from which the study may obtain the necessary data.

2.7. Sample Size

For the survey, the sample size of the study took consistent two respondents as the key informant
interviewee.

2.8. Quantitative or Qualitative Approach

Typically, a quantitative study has a logical and linear framework, and it conducts hypothetical
expectations between various relations (Eidable et al., 2002). This implies that the hypothesis will either
be accepted or rejected depending on how these relationships are determined in that particular subject.
To determine the relationship between one set of data and another, a quantitative study depends on
statistical data analysis (Eidable et al., 2002).

In a qualitative study, the focus is on the meaning and comprehension of the subject (Eidable et al.,
2002). With the aid of observations and interviews, qualitative research is conducted to better
comprehend the subject's natural environment rather than depending solely on statistical data measures
(Eidable et al., 2002). Therefore, obtaining a suitable understanding requires in-depth expertise. This
indicates that qualitative research involves direct interactions with subjects and personal observations
(Eidable et al., 2002).

The qualitative technique is used because RANCON Developments Ltd.'s cash management is the
subject of the analysis. Numerous interviews and observations must be conducted because the purpose
of this study necessitates that I understand how the firm functions.

Chapter 3: Findings & Discussion:

To meet their daily obligations, they must manage their cash resources (Collins & Jarvis, 2000). Many
organizations do not give controlling the firm's liquidity adequate attention. For smaller firms, efficient
financial management is crucial (Sardakis et al, 2007). Because they can last for a long time without a
profit but fail when they can't make a payment, it is crucial for smaller businesses.

3.1. Restricted Capital

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Particularly in the accounts receivable, capital is limited. The period of managing capital between
sending a bill and receiving payment is known as the cash cycle. The goal of this report is to keep the
cash cycle as short as feasible. Cash-to-cash is another name for the period between accounts payable
and receivable. It has been demonstrated that shortening the cash cycle improves the firm's short-term
cash flow as well as its medium-term working capital. The working capital is determined by subtracting
short-term debt from current assets (Chittenden & Bragg, 1997).

The management of payables and receivables directly affects the restricted capital. The primary goal
here is to shorten the time between receiving an order and the customers paying it or to expedite the
cash collection.

Some questions are:

 Does RANCON Developments Ltd. have a healthy cash position at the beginning of 2020?
 Which factors within cash management will improve the cash for RANCON
Developments Ltd. and how?
 Can mixed-up capital be free from the viewpoint of cash management?

Table num 1: Statement changes in equity

RANCON Developments Ltd.

Statement changes in equity

June 30, 2020

particulars Share Retained earnings Total equity

capital

Balance 1 30000000 43969231 13969230

July 2018

Total income - (11870616) 11870616

Balance 30 30000000 (55839847) 25839846

June 2019

Balance 1 30000000 (55839847) (25839846)

July 2019

Total income
- (10650609) (10650609)
Balance 1
June 2020

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 30000000 (66490456) 36490455

3.2. Payments

This research will continue by demonstrating theoretical sectors that are crucial to consider. This
corporation controls its payment procedures well (Larsson & Hammarlund, 2004). This subchapter will
discuss potential options, including the use of a sales ledger, analysis of account receivables, terms of
payment, enhancements to order/billing procedures, and interest-bearing loans.

3.2.1. Sales Ledger

A sales ledger can be described as a detailed map of the accounts being used for the accounts
receivable (Kirkby, 1993). The point of using a sales ledger is to get information about the
outstanding receivables beyond what is available in the accountancy. This can be when the bills
mature, how much the turnover is per customer, the basis of price setting, and so on. This is also
a good tool to know what the customer’s paying habits are and to be able to analyze them.

3.2.2. Analysis of Financial STATEMENT

In 2019-2020 total cost is 102846648 BDT in 2018-19 9564058 BDT

Here cash flow is 9693778 BDT and 2018 -19 10811690 BDT in operating activities. Here are the
investing activities 720590 BDT and 2677730 BDT. In financing activities 3887639 BDT and
58390994 BDT. Here is the cash end period 25306232 BDT and 39345911 BDT

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Table num 2: Financial statement

particulars 2019-20 2018-19

Assets

Net current assets: 6467890 6704131

Property per 6467890 6704131

equipment

Current Assets 1655950713 1229353345

Inventories 1424669941 923847575

Advance deposits 105568458 237509085

Advance tax 162828 198909

Nontrade receivable 100243255 28451865

cash 25306232 39345911

Total assets 1662418603 1236057476

Equity

Shareholders’ Equity (31490456) (20839847)

Share capital equity 30000000 30000000

Retained earnings 66490456 (55839847)

Share money deposits 5000000 5000000

Non-current liabilities 109938375 160024042

Long term loan 109938375 160024042

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 Current liabilities 1583970684 1096873281

Short term loan 46198343 315

Trade payable 1851095 -

Provision for tax 529425 626182

Non-trade payable 3397020 3397020

Advance from 1531994801 1092849764

customers

Total shareholders
1662418603 1236957476
‘balance equity

Net asset value 5541 4120

3.2.3. Term of Payment

The payment term is essential for restricted capital. The usual payment terms in Bangladesh are
30 days. There are in some cases that the customers are late with the payments. It is very costly
for the company. Late payment problems are one of the primary causes of business failure
among smaller firms from the viewpoint of cash management, the company wants to get the
money as fast as possible to be efficient (Farris & Hutchison, 2002). The reason why customers
do not pay before the maturity can be (Larsson & Hammarlund, 2004):

 Penalty interest is not charged

 There is a shortage in payment requests; reminders are not sent to the customers.
 The maturity of the bills can be too short for the customer to pay in time.
Whatever the reason is, the company has to act, and it has to be fast since there is a clear
relationship between late payment issues and bankruptcy (Wilson, 2008)

3.2.4. Improvement on Order/Billing Routines

Before considering building efficient routines, the company must be aware of the relationship
between the financial department and the production department (Larsson & Hammarlund,
2004). Issues such as:

 Layout of order, delivery, and billing routines

18 | P a g e
  What persons are involved?
 What computerized systems are being used?
 How does the payment condition look like?
 Paying behavior, which customers do not pay on time?

Errors in deliveries can be a reason why customers are late with their payments. Managing late
payments can easily reduce profitability, especially when the profit margins are tight (Paul,
2007). That is the reason why the finance department must have a good relationship with other
departments within the company. Taking time to gather information/statistics can be useful. The
company can make basic statistics on:

 Wrong products that have been delivered

 Product delivered to the wrong address
 Damaged goods on delivery
 Installation of the good has not been done properly
 Number of complaints
All these errors negatively affect the restricted capital and at the same time spread a bad
reputation for the company. The production/service department should get the information as
fast as possible about the delivery agreement, so they have time to deliver the service on time
(Larsson & Hammarlund, 2004).

The next step would be to calculate and see if there are any possibilities to earn extra money
with faster order/delivery routines and calculate reduced restricted capital (Soenen, 1993).
Examine when the company sends the bills about the delivery or finished product, then
calculate the number of days between delivery and billing and value the amount of released
capital by having faster billing routines.

3.2.5. Interest-bearing

Having good payment routines is important because there is money to earn through that. The
key here is to make the money interest-bearing, as fast as possible. There are two types of
accounts for that, transaction, and investment accounts (Larrson & Hammarlund. 2004).

The companies want to manage the money by having them on an interest-bearing account. A
good way to have control over the money and put them in an account with high interest right

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away is to send out invoices to the customers. The company can send the invoice with bank
OCR service (Optical Character Recognition). This means that the money will be registered on
the accounts on the same day.

3.3. Payouts

Paying the suppliers too long before the maturity of the invoice and not taking advantage of it is
not the most efficient approach. That could create unnecessary capital that is tied up for the
company (Larsson & Hammarlund, 2004). The company should manage a system/routine,
which makes it easier to keep control over the maturity of the bills and also different discounts
that the company should take advantage of and pay at the last possible minute (Farris &
Hutchison, 2002).

This is a similar calculation to analyzing the account receivable, but the result here explains
how many days the company can hold the capital from a sale. The company wants to stretch the
number of days payable as much as possible to shorten the cash-to-cash cycle (Randall &
Farris, 2009).

The cash management profit is not just based on the payment routines. Has the supplier
delivered the product on time? Restricted capital can be the result of an earl delivery which
usually means that the maturity of the bill is shorter. This should then be discussed with the
suppliers.

3.4. Liquidity Management

Having efficient and effective liquidity management is very important for survival, especially
for smaller businesses (Sardakis et al, 2007), since they operate with fewer sources of both short
and long-run financing than bigger companies (Moss, 1993). Liquidity means the level of cash
and near cash, assets held, together with cash in and outflows of the assets (Ekanem, 2010). It is
possible to measure a firm’s liquidity with a different types of cash flow ratios (Jooste, 2006).
How they are calculated is presented later on. These ratios are very helpful to determine the
firm health as well (Jooste, 2006). One can measure the cash flow ratios of suppliers and
potential buyers to see if they are healthy and confirm that they do not have any liquidity
problems (Figlewicz & Zeller, 1991). The concept of performance ratios is not something new,

20 | P a g e
but the availability of the data is easier to get today, and firms should take advantage of that
information (Carslaw & Mills, 1991).

As it was discussed earlier, an optimum liquidity position is a decision to shorten the cash-to-
cash cycle (Farris & Hutchison, 2002). That improves the profit and means that the firm does
not have a great need for external financing (Moss, 1993). Management of working capital is
crucial for both liquidity and profitability. If the management of working capital is poor, usually
means that money is locked up in working capital (Ekanem, 2010). It is also important to be
aware that late payment of invoices can be very expensive.

3.4.1. Liquidity Budget

A good tool to manage liquidity is to have a liquidity plan which can be done by doing a
liquidity budget. Budget is one of the key elements since the result helps to frame the firm’s
future opportunities (Lazaridis, 2006). Different types of software can be helpful and make it
easier. The company can either purchase a program that is already out there or create its own.

3.4.2. Liquidity Reserve

It is not enough to just have a budget to make sure to have money for different types of
transactions. The company should hedge itself against various surprises that the company can
run into (Larsson & Hammarlund, 2004). The size of the liquidity reserve depends on many
factors. There is of course a relationship between the cash cycle and the liquidity reserve. If the
cash cycle is long, then the minimum liquidity needs an increase, and vice versa (Farris &
Hutchison, 2002).

Having a minor reserve can be a risky while to large reserve can lead to a reduction in revenue
(Larsson & Hammarlund, 2004). How the profitability is affected can vary.

By calculating cash flow ratios, one can determine how well the firm can repay loans, maintain
operating capabilities, and make investments without external financing (Jooste, 2006). To
measure liquidity one can measure the relation between the liquid assets and short-term debt in
the company’s balance sheet (Moss, 1993).

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3.5. Short-term Financing

Short-term financing means business financing from short-term sources, which are for less than
one year. The same helps the company generate cash for working the business and for operating
expenses, which is usually for a smaller amount. It involves developing money through online
loans, lines of credit, and invoice financing.

3.5.1. Factoring

Factoring could be one of the solutions to speed up the cash cycle. This means that the firm
receives finance from the factor (Kirkby, 1993). In this way, the tied-up capital is released. The
major banks have become more involved either directly or indirectly with factoring, as a
banking service (Kirkby, 1993). Factoring can also be seen as a sales accounting service that
protects firms against bad debts (Kirkby, 1993). Another advantage is that the current ratio is
strengthened (Kirkby, 1993). The current ratio is very important, especially for banks, when a
company is considering a bank loan because a bank manager has to rely on past performance as
a tool (Phelps, 1956). By having a factoring agreement, the company can focus on production
and marketing which is very important for companies with weak accounting (Kirkby, 1993).

3.5.2. Leasing

Asset-based financing such as leasing could be considered for short-term financing (Callimaci
et al., 2011) since it releases capital, which would in otherwise be tied up on inventory or other
equipment (Larsson & Hammarlund, 2004). Leasing means that the lessee obtains the right to
use the asset for a fee, but the lessor maintains the ownership (Callimaci et al., 2011). The price
and the length of the contract can be compared by finding the present value of the cash flow
over the period of the lease or by algebraic models (Rowland, 2000). Leasing can be seen as a
more flexible way to finance an asset than traditional lending because it can be customized for
the seller in several ways (Callimaci et al., 2011). An example can be that the payment
schedule is adjusted to suit the companies.

22 | P a g e
23 | P a g e
Chapter 4: Recommendation

Since cash management is a very broad subject and includes more elements than this
paper presents, I have a couple of suggestions for further research. As RANCON
Developments Ltd. does not have any business overseas, I had to delimitate international
cash management. It is very interesting to study firms with global business and can
therefore include topics such as currency risk management. Larger organizations with a
bigger range of customers and higher turnover where the payment routines are more
complex can be interesting to investigate.

24 | P a g e
Chapter 5: Conclusion

Does RANCON Developments Ltd. have a healthy liquidity position at the beginning of 2012?

Even though RANCON Developments Ltd. does not have any employees that manage the
liquidity of the firm, RANCON Developments Ltd. are still handling the liquidity very
well. The routines and the payment plan before each project are managed impressively.
Planning and accuracy are the keys to why RANCON Developments Ltd. can
impressively handle liquidity, even without any advanced financial experience. The
quick ratio and cash-to-cash cycle demonstrate that RANCON Developments Ltd. has a
healthy liquidity position at this moment.

Which factors within cash management will improve the liquidity for RANCON
Developments Ltd. how?
The cash-to-cash cycle and the quick ratio explain that RANCON Developments Ltd. has
a healthy liquidity position but there are still some ways to make it more profitable with
cash management thinking. I believe that the issue is that RANCON Developments Ltd.
handles all the invoices manually as well as the accounting. From a viewpoint of cash
management, these routines should be managed as efficiently as possible.

Can tied-up capital be released from the viewpoint of cash management?

RANCON Developments Ltd. is already releasing a lot of capital by leasing the majority
of its equipment. I can conclude that releasing capital through factoring is not a profitable
approach since RANCON Developments Ltd. can pay its short-term debts without any
external source of financing.

25 | P a g e
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Appendix

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particulars 2019-20 2018-19

Assets

Net current assets: 6467890 6704131

Property per 6467890 6704131

equipment

Current Assets 1655950713 1229353345

Inventories 1424669941 923847575

Advance deposits 105568458 237509085

Advance tax 162828 198909

Nontrade recievibal 100243255 28451865

cash 25306232 39345911

Total assets 1662418603 1236057476

Equity

Shareholders Equity (31490456) (20839847)

Share capital equity 30000000 30000000

Retained earnings 66490456 (55839847)

Share money deposits 5000000 5000000

Noncurrent liabilities 109938375 160024042

Long term loan 109938375 160024042

Current liabilities 1583970684 1096873281

Short term loan 46198343 315

Trade payable 1851095 -

Provision for tax 529425 626182

29 | P a g e
Nontrade payable 3397020 3397020

Advance from 1531994801 1092849764

customers

Total shareholder’s
balance equity 1662418603 1236957476

Net asset value 5541 4120

particulars Share Retained Total equity

capital earnings

Balance 30000000 43969231 13969230

1july 2018

Total - (11870616) 11870616

income

Balance 30 30000000 (55839847) 25839846

June 2019

Balance 1 30000000 (55839847) (25839846)

July 2019

Total
income - (10650609) (10650609)

Balance
June 2020 30000000 (66490456) 36490455

Particulars 2019-20 2018-19

Cash Operating System

Net profit of the year (10650609) (11870616)

30 | P a g e
Adjustments 1058926

Depreciation 956831 (10811690)

(9693778)

Operating surplus

Inventories (500822366) (410075692)

Advance dps 131940627

Income Tax 36081

Nontrade receivable (71791390) (36000)

Other payable 1851095

Tax provision (96757)

Nontrade payable -

Security deposit 519394921

Advance from customers 439145037 98471602

Net cash (9431450)

Cash Flow from investing

activities

Intangible assets
(720590) 2677730
Investment

Net cash
(720590) 2677730

Cash flow financing activities

Long term
(50085667) (436570320)
Short term
(46198028) (14733962)

Net cash

31 | P a g e
 (3887639) (58390994)

Net increase cash (14039679) 37402878

Cash from starting period 39345922 1943032

Cash from the end period 25306232 39345911

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