Optimization of the company's cash flow

SECTION 1: INFLOWS GLOBAL MANAGEMENT
Excess cash translates into cash idle source of opportunity costs. Moreover, sleeping money involves financial costs.
It is financed by funds that have a cost to the company. When cash is on deficit, is generally filled by bank credits.
Manage its cash flow is to strive to make the balances of the company in each store also nearby zero as possible. As
for the company, IWACO’s considered a first distributer for the INWI mobile operator, for which activity, the company
benefits from two credit lines, one in the BMCE bank and another one in AWB bank; yet the problem arrives when
the company compares the INFLOWS stocked in the two banks and come out with the conclusion that the banks
which benefits from the more than 50% of the IWACO’s turnover is the same bank that offers less credit in the
company’s bank account , For this purpose the financial manager must:
Firstly, detect and remove all waste through better knowledge of cash flows;
Secondly, assess the conditions granted by the banks to the company and enter into any new negotiations.
I- The control of cash flow and cost savings.
Treasurers few know precisely the value and the behavior of the cash flows. This ignorance leads to the formalization
of idle cash hardly noticeable at first sight. The company supports "the unnecessary cost of money who sleeps” by
the fear of the “Overdraft” or the Credit Line. These funds are at the origin of a huge waste of financial expenses. To
improve the management of its cash in the short term, the company shall keep accounts "in value dates.
A - FORMALIZATION OF IDLE CASH.
The bank balances too approximate knowledge coupled with the fear of the debit balance causes the formalization
of idle cash.
1 - THE LACK OF BANK BALANCES.
Banking movement’s accounts held by the company 'in dates of operation" mask the existence of funds unused cash
and transit ("float"), generating costs.
1.1 - Accounting is held "in dates of operation”.
Indeed, the Treasurer records in its books variations bank balances at their date of posting and not of occurrence.
Thus in the case of a supplier paid by check, the check issued a given day will be counted in spending at its date of
issuance. In fact, the Bank will discharge the company’s account unless two days pass after presenting the check to
the bank 'two days of Bank": this is the value of the transaction date. Furthermore, usually the creditor doesn’t
present immediately this check for collection; this will increase the gap between the trade date and the value date;
yet, for the IWACO case, the suppliers present immediately the check for discharge in banks and then same do them.
The Treasurer of the company therefore tends to underestimate constantly balance Bank. The first phenomenon led
to "oversize" its use of bank financing and let develop idle cash. The importance of the "float" exacerbates this
situation.
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