Optimization of the company's cash flow

(b) SHORT-TERM DATA:
Beyond the very short term (one month) the income-expenditure method proves quite coarse. Indeed, the
information for these flows are not always available. Operations that will result in cash receipts and disbursements
in the coming months may not have been still incurred. Yet the knowledge of potential imbalances is indispensable.
The Treasurer will be able to intervene to modify as appropriate, the date of commitment of operations to adjust
input stream and output stream. Similarly the bank credits may be obtained in favorable terms if they are applications
several months in advance.
Beyond the very short term (one month) the income-expenditure method proves quite coarse. Indeed, the
information for these flows are not always available. Operations that will result in cash receipts and disbursements
in the coming months may not have been still incurred. Yet the knowledge of potential imbalances is indispensable.
The Treasurer will be able to intervene to modify as appropriate, the date of commitment of operations to adjust
input stream and output stream. Similarly the bank credits may be obtained in favorable terms if they are applications
several months in advance.
The resources-needs method, which we'll talk about, is better suited to such an analysis. It indeed makes it possible
to explain the causes of variation in cash. The analysis in terms of revenue-expenditure then finds its justification in
the framework predetermined by the resource-needs method.
2. FORECASTING BEGINS WITH A BETTER CAPTURE OF INFORMATION.
Only an appropriate organization may allow the Treasurer to gather information essential to good forecasts.
Moreover, anyone in the company whose actions or decisions have an impact on the inputs or outputs of funds must
be sensitized to the problems of cash. It is to this extent that it will effectively contribute to the improvement of the
input of information
3 - THE TRACKING OF CASH FLOWS MUST BE HELD IN 'VALUE DATE '.
The movement of bank accounts follow special rules should know. There is always a lag between the date of the
transaction and the date of registration of the transaction to the account by the Bank (discounts after their effective
date and before withdrawals are entered). Ignore the day of value system is to expose to heavy financial loads:
unnecessary interest, financing of a fictional overdraft, occult idle cash cost.
4 - 'REVENUE-EXPENDITURE' PREDICTION METHOD CAN LEAD TO AN OPTIMUM FINANCING OF CASH
REQUIREMENTS.
Optimum financing is an effective funding directed at the lowest cost. For this it must be adapted to the nature,
volume and duration of the needs. However, the traditional method of forecast revenue-expenditure leads neither
to the knowledge of the daily variation of the bank balance, so the cash requirements in the very short term, nor to
the knowledge of needs of bearing, so short-term cash
3.2 - PREDICTION METHOD 'RESOURCES-NEEDS '.
Cash flow forecasts are obtained by a projection in time equation:
Cash = working capital fund - working capital needs.
Forecast changes in cash will therefore appear as the difference between projected changes in working capital and
planned changes in working capital needs.
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