Optimization of the company's cash flow

Type of
Risk
Analyze
the Risk
Evaluate
the Risk
Itercept
the Risk
Reduce
the Risk
Eliminate
the Risk
Eliminate
the Risk
After determining the residual risk, it considers that the company is not able to assume it, he (Treasury manager)
decides to ensure that risk by adequate coverage. Indifference, negligence or distrust of insurance can result in
serious financial difficulties, and even lead to bankruptcy in the event of major disaster. The insurance is undoubtedly
a financial burden for the company. But the cost of the insurance is relatively low compared to the guarantees and
benefits it offers. A disaster such as a fire is still very expensive by the induced financial consequences. Insurance
changes the risk in some reduced cost; It prevents the creation of expensive idle cash and ultimately will prove to be
insufficient in a claim; It allows to limit expenditures for prevention whenever possible; it compensates the lack of
financial resources of the small and medium enterprises; It is a factor of improvement of profitability and liquidity of
the firm.
Statistically impossible to measure, voluntary cash is no longer justified if the company strives to synchronize the
inputs and outputs of funds, and if the protection against the risk is through prevention and insurance. In addition, it
is difficult to see in the light of experience, how a company would retain a voluntary excess cash while it is in debt
with its banks: it would maintain an idle cash 'funded' by a short-term high-cost credit. With respect to non-voluntary
cash, should define the actions to take to reduce.
2 – THE TREASURY-CASH FUNDING USING THE STOCK MANAGEMENT.
In this regard, two a priori underlie these models:
Transfer (cash - securities) as essential means of financing policy;
And the homogeneity of the nature of the funds.
It is appropriate to assess the limits.
2.1 - THE “TRANSFER POLICY” AS AN EQUILIBRIUM TOOL OF CASH-TREASURY: TRANSFER INTER-AGENCIES
In this way of managing the cash in terms of inventory management transfer policy has an essential role. It is the
preferred means of deficits and pay off the cash surplus. In any case it is not in reality the central role given to it by
the models. This policy is neither always possible nor always profitable. For IWACO, such a policy is usually possible
only on periods longer than one month, or in some cases, when the Product is needed in a specific area while it is
ignored in another one and the company can’t make another call for the mother company to send the product; in
one hand it costs money and takes time. In addition, it is profitable only under certain conditions. It is necessary:
That a large volume of flow through the company;
That the investment period is long enough OR profitable enough.
However, even when it is not systematic, a policy of investment of surpluses has its place in the cash management.
The choice of the placement of the cash surplus should be based on the net cash flow profile. But the cash
management is not limited to establish a transfer policy. It must, on the one hand, to provide the cash requirements,
and, on the other hand, to find the best financing of these needs. As further to now, the company has addressed the
first aspect of the cash policy that we define very briefly. As to the second aspect, it has been also used according to
the typology of the need as we’ll explain it:
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