Optimization of the company's cash flow

cash; and therefore, must be a stock to meet withdrawals of the day. This cash is well comparable to a stock of goods.
But extending this idea in terms of cash management is abusive.
1 - Control of cash flow.
If systematic efforts are underway to obtain the highest possible synchronization between revenue and expenditure,
the detention of cash loses its interest. The key to such a policy is the close control of the timing of receipts and
payments. Effective objective is therefore not to maintain an optimum wheel of cash, but predict the size and date
of the movements of funds resulting from the activity of the firm, in necessary influence the occurrence and procure
possibly, on time and at the lowest cost, additional availability.
For almost all of the possible cases of management, the company IWACO’s cash flows are largely predictable. So the
volume and maturity of many large transactions are under the direct control decision centers (financial management,
control and management of audit...). Other transactions are the normal accomplishments of past commitments. And
even, in the case of truly random, it is usually possible to reattach them to some moves at least partially known or
systematic. Searching for an optimum volume of liquidity to hold at the beginning of period, on the other hand, away
from the maker of one of the fundamental aspects of a genuine policy of cash: the control of the flow of funds.
If the traditional approach to value, on a purely theoretical level the intuitive reasons that sometimes push some
companies to hold cash, it does not represent necessarily the most rational, and in any case the most effective
attitude. It confuses what is (or believed to be), with which it should be. Therefore, insurance may be a sufficient tool
to predict the cash inflows.
1.3 - THE ASSUMPTION OF THE UNEXPECTED AND THE DETENTION OF LIQUIDITY.
Pointing out that presumably, could limit the importance of precautionary cash, and therefore to reduce the cost of
detention of liquidity by resorting to insurance. However the risk management takes in businesses, a place more
increasingly important and contributes to the achievement of the security objective. Insurance is the last link in this
strategy of risk.
Insurance is an operation by which "the insured" is promising, for a fee, "premium", by 'insurer' compensation, in
the event of occurrence of a risk defined in advance. But if insurance unloads the firm from the financial
consequences of random events of costs, does neither totally nor free. Its role is not to support "the risk", but risks.
Insurance changes the risk from an inknown object into an assured object. Indeed:
Firstly, it transfers to another, 'the insurer', the potential financial burden of risk, which is then the subject
of a collective and not individual apprehension;
On the other hand, it enables the company to integrate the "stabilized" cost of risk in the cost price of the
production.
It is up to the Manager to weigh the consequences on the life of the company of the realization of such or such risk.
The final purpose of insurance is to transform a possible disaster in constant charge of exploitation. It is therefore
appropriate to cover the risks which can be:
Either cause a crisis of cash;
Either create an operating loss;
Either compromise the profitability of investments.
The manager is in all ways called to manage a modest amount of INFLOWS CASH coming from the result of the
company’s cash situations. The role of the "head of the risk and insurance management" is to search what are the
risks to which the company may have to face, analyze and evaluate them financially, and then is avoid, reduce,
eliminate if possible, possibly to transfer them to a third part.
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