Optimization of the company's cash flow

d. Clients’ modalities:
This case concerns the condition of payment that the firm IWACO discuss with its clients in order to have the cash
available before the deadline of paying the BU2 supplier. Also, in order to get the attraction of clients and to facility
the profit for the firm, the payment wasn’t decided in one shot but more like many shots, reserving the minimum
amount in the short period in order to facility the transactions for the company.
30% on the same day, not more than 24 hours.
10% in ten days in order to reserve to trust with clients and to insure the financial liquidity inside the
firm.
60% and the reason behind is to eliminate the pressure on the clients and in other hand to insure the
company’s liquidity on the exact date before paying the big supplier; BU2 supplier.
e. Beneficial margin:
Like with any supplier, a beneficial margin is reserve for the distributers that work on selling the mother company’s
products, and the reason behind is that the prices are usually different and not similar in order to avoid the
destruction between supplier and client.
For what is related to the supplier’s payment modalities, the condition are different but still related to the one of
clients. The following chart will represent the conditions contracted with the BU2 supplier:
Table n°22: Simulated purchases merchandises for BU2 and the financial Gain of supplier’s payment
Similar conditions of the clients but different in terms of date and period. The criteria of these condition are based
on being in earlier date than the one contracted with clients, the fact that the company should have liquidity before
the deadlines of paying the suppliers. Therefore the contracted conditions were like following:
a. Amount T.T.C.:
These amounts are generally fixed a month before selling to clients, and so that the company could have the
merchandise a month before the day f selling it.
b. Supplier modalities:
The basis of restructuring the data inside this angle of the operation is so that the company could have liquidity
reserved in the cash-treasury of the company.
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