Optimization of the company's cash flow

Regarding the previous chapters, and the explanations of how the company could financially optimize its treasury,
such an operation doesn’t fixe a situation without leaving impacts behind. Therefore, the next chapter will explain in
details the impacts of the optimization of the treasury and the merging operation.
3. Impacts of the merging BU1 and BU2:
Like any other company, a financial situation has a negative impact as it has a positive one. In this case, the company
faces both impacts and each one with its own way of resolving it:
a. Positive Impacts:
Overdrawn the company: The addition of a new supplier of the company put it a situation of full use
of the overdraft which is beneficial for the company in case of up grading the overdraft line and it
helps in the bank negotiations for extra funds.
Alleviate the cash treasury: A side the exhaustion of the overdraft, the company gets space for having
more purchases transaction with the supplier and then more profit.
Dis-balance of the financial situation of charges: The increase of the financial charges in the BU2
account is make on the behalf of the new supplier account BU2 which is called: Synergy
Increase bank charges: Instead of creating a new bank account and then support the financial
charges, the company merge it with the old activity and then reduce the financial charges
b. Negative Impact:
The balance dependencies: The cash’s treasury management requires for the company to make a
certain reliance between the daily balances of the year, which means, that in one exceptional
situation of purchases, the company get the threat of misbalancing the whole year balance, and this
dependency is the basis of work for the company’s effectiveness on the field.
C. RECOMMENDATIONS:
In this chapter, we try to make few suggestions of how the company could solve the negative impacts of the merging
operations of BU1 and BU2. The recommendation are as follow:
1. Arbitration between the BU1 and the BU2 purchases: When the company realizes a certain
space for having more and extra purchases chances and increases the overdraft line, this
opportunities should be taken as an occasion for arbitrating between the BU1buying
products and the BU2 ones. Usually, such a decision is taken based on the market’s situation;
prices, tendencies, consumption, reputation, value…etc. where the company chose the one
with the most important advantages.
2. Increase the BU1 overdraft: The Company can have the chance of negotiating the overdraft
in order to increase it for a higher level. Yet, this step as much as is important, it is impossible
or extremely unreachable, because the green light of making such a negotiation with the
banks is limited and related to the Board of the company.
3. Negotiate the supplier’s overdraft: This decision is basically related to the second one, where
the company is able to make such a decision only if the bank allowed them the increase their
overdraft, but when it is not possible, the company could face more dangerous financial
cases and supports extra financial charges that could overdrawn the company into a deep
loss.
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