Implementation_Plan

Introduction Lawrence management is currently in need of a recommendation to reduce future difficulties in its financial side of the business. As financial managers of Lawrence Sports we have come up with three alternative working capital policies. These policies will reduce future troubles and will also include an evaluation of the risks associated with the recommendation as well as the contingencies implementation plan for our recommendation. Implementation Plan In our efforts to create an implementation plan for our recommendation it is important to look at all aspects of the business. Firstly we believe that it is important to implement an agreement contract with our retail and manufacturing partners. Doing so will allow is to adjust margins and payments in accordance to the various season or unforeseen global meltdowns. However in order to move forward with this recommendation there will be much organizational planning involved. It is crucial that the working capital management team have a meeting with their business partners at the beginning of each quarter to go over contract agreements that review financial information such as percentage criteria and various payment options. Once an agreement has been made and everybody is on the same page, then each body operates under the agreement until the following quarter where once again the financial information will be presented and reviewed. Implementing a new cash management process as well as a new trade credit policy will occur in the following course of action: Once the agreeable terms of sale with Mayo have been established, management will outline the next lucrative possibility. The agreement contract mentioned earlier will include the credit analysis, terms of sale and a policy based on collecting. Once the guidelines are in place, the finance department can calculate the target cash balance, which will then be, assessed bi-weekly. At this point the capital management expenditure will be created. Moving forward, management can begin looking into alternative suppliers and retailers. The assessment schedule will be as follows: Once a month there will be credit and financial information reviews. On a weekly basis there will be supplier payables correspondence. Retailer analysis updates will be looked at bi-weekly and operations will be assessed daily. Following such guidelines will put Lawrence Sports on the right track, financially, and will also help eliminate cash shortages, which by definition is when “the physical amount of cash on hand differs from the book recorded amount of cash” (Answer’s, 2010). Lawrence management must not forget “the goal of working capitol management which is shareholder wealth maximization, avoiding negative NPV decisions and seeking positive – NPV decisions (Emery, Finnetry and Stowe, 2007). With the new Implementation Plan that Lawrence Sports will follow, not only will the cash shortages non-existent but the company once again be on the track to economic success. References Emery, Finnerty, Stowe (2007) Corporate Financial Management, (3rd ed.) New Jersey: Pearson -Prentice Hall. Retrieved online from: www.answers.com on June 6th 2010.