Optimization of the company's cash flow

2.2 - THE ASSUMPTION OF THE HOMOGENEOUS NATURE OF THE FUNDS.
All the management tools consider cash flow composed of units of "means of Exchange" that they equate to a good
hardware units. The fundamental consequence is that manage the cash of a firm is to maintain a stock of currency
to ensure the continuity of the flow of funds that passes through the company. Optimization models are essentially
interested in the variation in the level of cash; to a certain extent, simulation models seek to assess the flows that
contribute to the formation of this cash. All of these models focus and overlook the nature of these flows, or more
accurately, consider it implicitly homogeneous. In other words it ignores their causes and their flow mechanisms.
This leads to extract cash from its context management and to reduce:
Either, to a policy of transfer cash-securities
Or a caricatured financing policy.
The nature of flows is not homogeneous: it depends on their origin and their destination, but also the length of the
period of observation and the currency with which they have been evaluated. As many variables whose knowledge
is the first condition of the conduct of a genuine policy of Treasury, i.e. optimal adaptation between needs and
financial means, gage solvency. Indeed, this adaptation means the control of the flow of funds and the efficient use
of banking services; shares depends on the nature of the flow.
1 - The nature of flows and adaptation between needs and financial means.
No model is highlighting two seizure of cash flow levels:
Firstly, the variation of the bank balance,
Secondly, the movements of the cycle of exploitation (or circulating capital).
Almost all models are concerned only with changes in the bank balance, without however providing a satisfactory
approach. Some simulation models tend to confuse the two movements of IWACO’S TREASURY. For the treasurer,
the control of these two operations remains on maintaining the “CASH-POOLING” of the company’s accounts.
However, the needs in these two cases are different, and therefore involve a specific funding. Indeed, the structure
of the money market is such that any source of funds cannot finance any need. It is even certain types of competition
strictly tailored to the nature of the action. Revenues of the company are not composed of homogeneous units: their
structure should condition their employment in order to protect - and even improve - the potential of liquidity of the
firm’s turnover.
2 - The nature of the flows and cash treasury movements.
Statistical models, as opposed to mathematical models, insist on the importance of the estimates. But they consider
these flows as data. Now, admittedly, the possibility of acting on their behavior, and, therefore, to try the
synchronization of input and output flows. Naturally, a perfect master assumes a thorough understanding of the
nature of cash flows. We will try to draw procedures for reflection and work useful to policy-makers in this field,
student including:
We have seen that it is necessary to think of the transfer policy. Regards financing policy, we will see later, that it
cannot be reduced to the simple needs-means confrontation: the needs as the means have specific characteristics
which must be considered in order to compare them. For example the export credits:
The causes of the movements of cash.
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