Optimization of the company's cash flow
This book is about the company's treasuries and financial management, more specifically; it shows how a company can manage its treasury in an efficient and short way.
This book is about the company's treasuries and financial management, more specifically; it shows how a company can manage its treasury in an efficient and short way.
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3 - Any increase in liability involves a <strong>cash</strong> receipt.<br />
4 - Any decrease in assets involves a <strong>cash</strong> receipt.<br />
5 - Any charge involves a disbursement.<br />
6 - Any product involves a <strong>cash</strong> receipt.<br />
But <strong>the</strong>se implicit assumptions are patently unrealistic.<br />
2 - THE LIMITS TO THE ASSIMILATION OF ACCOUNTING FLOWS TO CASH FLOWS.<br />
The causes <strong>of</strong> <strong>the</strong> gap between accounting and <strong>cash</strong> <strong>flow</strong>s result from <strong>the</strong> implicit assumptions. There are three:<br />
Firstly, <strong>the</strong> <strong>flow</strong>s recorded by <strong>the</strong> General Ledger do not match all transactions between <strong>the</strong> company and its<br />
environment.<br />
Then <strong>the</strong>re is regulation time.<br />
Finally, <strong>the</strong> various results that a company may release its operations do not necessarily cause body<br />
movements.<br />
2.1 - FLOW ACCOUNTING AND MONETARY EXCHANGE WITH THIRD PARTIES.<br />
Flows recorded by <strong>the</strong> General Ledger are not all exchanges between <strong>the</strong> company and its environment. A job or a<br />
load do not necessarily give rise to a disbursement; similarly, a resource or a product do translate not always by a<br />
<strong>cash</strong> receipt.<br />
(a) Funds applied and Funds received do not necessarily correspond to <strong>cash</strong> receipt and disbursement <strong>flow</strong>s.<br />
The changes that affect <strong>the</strong> balance sheet <strong>of</strong> a company can have two origins: <strong>the</strong>y may be <strong>the</strong> result, in <strong>the</strong> first<br />
place, <strong>of</strong> transactions between <strong>the</strong> company and a third part (customers, suppliers, bankers, etc.). In this case, Funds<br />
Applied (such as acquisition <strong>of</strong> assets, debts, etc.) and Funds Received (such as capital increase by contribution <strong>of</strong><br />
money, credits, etc.) necessarily imply INFLOWS and OUTFLOWS. Secondly, <strong>the</strong> variations <strong>of</strong> certain balance sheet<br />
items may only be <strong>the</strong> result <strong>of</strong> a game <strong>of</strong> accounting entries. Funds Applied and Received have <strong>the</strong>refore no direct<br />
monetary consideration: it is <strong>the</strong> case <strong>of</strong> depreciation operations, establishment <strong>of</strong> provisions, revaluation <strong>of</strong> assets,<br />
etc. These resources result from accounting <strong>flow</strong>s and non-misleading no <strong>cash</strong> <strong>flow</strong> that would alter <strong>the</strong> amount <strong>of</strong><br />
<strong>cash</strong>.<br />
(b) Expenses and products do not necessarily correspond to <strong>cash</strong> receipt and disbursement <strong>flow</strong>s.<br />
Can be distinguished in this regard, <strong>the</strong> <strong>cash</strong> <strong>flow</strong>s <strong>of</strong> operating non-monetary operation <strong>flow</strong>s. In <strong>the</strong> case <strong>of</strong><br />
depreciation, for example, credited to income allocations give rise to no disbursement.<br />
2.3 - TAKING INTO ACCOUNT DELAYS IN REGULATION.<br />
The reconstruction <strong>of</strong> <strong>the</strong> movements <strong>of</strong> <strong>cash</strong> requires taking account <strong>of</strong> shifts between <strong>flow</strong> <strong>of</strong> operations and <strong>cash</strong><br />
<strong>flow</strong>s related to <strong>the</strong> phenomenon <strong>of</strong> credit (credit to debtors and credit by creditors). Thus to calculate <strong>the</strong> amount<br />
<strong>of</strong> <strong>the</strong> <strong>cash</strong> receipts on sales, for example, can use <strong>the</strong> following procedure:<br />
SALES FOR THE YEAR,<br />
+ Receipts on sales from <strong>the</strong> previous year,<br />
- Credits granted on sales <strong>of</strong> this fiscal year and not yet expired at <strong>the</strong> end <strong>of</strong> <strong>the</strong> latter.<br />
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