Optimization of the company's cash flow

addition, these costs become very important accumulated over several periods. The securities revenue is eventually,
either it was an interest or dividend, increased or decreased of the added or minced value realized on the sold
security.
3 - THE DURATION OF THE PERIOD OF THE CASH FLOW FORECAST.
Banks ask daily accounts to their customers on the status of their bank balances. Interest expense, for example, apply
every day. It does not seem possible, obviously, to change this state of affairs. Also, predictive analysis of the situation
of cash must be daily and conducted value dates. The timing of the debt structure has a fundamental importance
in this regard. So if we succeed to concentrate cash on some days, revenues will remain only random flows. And, if
you can know the probability distribution of income over the period of time that separates two liquidity outflows, it
can extend the forecast period. A longer forecast period allows to reduce the time devoted to the analysis of the cash
position in reducing the frequency of labor, and therefore, the administrative costs...
4 - MINIMUM CRITICAL BALANCE OF CASH.
It is the value of the cash below which the cost of "cash break" begins to run.
1 - The value of the minimum balance is critical.
This value is theoretically zero. Many entrepreneurs while significantly above zero. Four essential reasons for this
behavior:
a) The fear of the overdraft.
The fear of the overdraft encourages the Treasurer to maintain a minimum cash positive. Is requires no always
enough if the detention of idle funds is not more expensive than any discovered him.
b) The requirements of the banker.
It is in the interest of the banker to get as strong as possible the deposit accounts. This provides, effectively, a mass
of resources which he can benefit by placing them in the very short term money market for example. Understandably
so that the quality of the services that a bank can offer a company (loans, credits, etc.) will depend on the average
minimum balance of account it holds.
c) The reasons for "reservations" we have already analyzed).
d) The negligence of people in charge when they ignore to form idle cash which then is a sign of over-funding of
the activity.
The Company should add a fifth reason: "minimum liquidity clause.
All these reasons are all the more critical that the company has several bank accounts.
2 - Failure to observe the critical minimum engages costs.
There are two ways to break this minimum and therefore to show breakdown of cash costs.
(a) In the first place, the balance may actually fall below the critical minimum. In this case the incurred expenses
may be twofold:
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