Optimization of the company's cash flow

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First, to assess more than just the financial needs and, thus, save Bank Charges by an optimal choice of shortterm financing; Then, in the case of structurally credit companies over a long duration, to establish the possibilities of blocking of funds in volume and duration, in the most appropriate jobs; Finally, in the case of companies structurally debtor for the coming period, to measure the lack of permanent capital. The problem for the company now is to assess the cost of its mismanagement of cash. 3 - THE ASSESSMENT OF COSTS IN THE TRADITIONAL CASH MANAGEMENT. By ignorance of the amounts actually available, the company has paid unnecessary costs because it has supported one discovered and funded from surpluses. In addition, through the days of value formed the "float". Float and idle cash create chances for more costs. 1) - Evaluation of unnecessarily paid charges. The minimum amount of “Bank Charges”* can save by improving cash management can be calculated as follows. It totals for all banks and on throughout the year, the value of the balances on the one hand, and the value of receivable balances, on the other hand. Each result is affected by its cost: the rate of discount for balances; the difference between overdraft rates and rates of discount for debit balances. TOTAL COST = ∑ TOTAL CREDITOR X (THE DISCOUNT RATE / 36.000) + ∑ TOTAL DEBTOR (THE OVERDRAFT RATE – THE DISCOUNT RATE) + ∑ 1/20% X (STRONGEST OVERDRAFT OF THE MONTH USING A UNSUFFISANT DISCOUNT) – (STRONGEST OVERDRAFT THAT DOESN’T AVOID STRICT MANAGEMENT) Yet, this formulate is still considered as theoretical on the realistic field of companies and financial management; the reason behind, is that the company’s financing condition are too different to be managed by such a complex formulate, from another side, the activities of the company are too sensitive to any fluctuation of flows or time, for that, the management goes with a simple arbitrage that the company does when they compare between the financial costs paid on the behalf of the loan lines in few banks that they contracted, and the amount of financial profit that they make from paying their suppliers in cash. Therefore, the company works on covering the financial costs of the bank overdraft. And it works as the following example: In the BMCI and AWB accounts, the company has in total 33.000.000 DHS of Overdraft. While the company makes 0.5% of the cash paid amount to the supplier INWI (that is considered as the main supplier of the company since it represents 99% of the company’s turnover The company gains in the financial costs: 0.5% of the paid amount (when it’s Cash). And they pay 5.35% of financial costs when they use the Permanent Overdraft (authorized). Knowing that the 0.5% is a daily rate, the annual rate will be equals to 6%, and the daily rate that the company use to pays its costs will be then: 5.35% Annual Rate = Daily Rate x 12. And Daily rate = Annual rate / 12. Page 84 of 124
Therefore; when the company realize an investment of buying 33.000.000 DHS of goods from the company INWI or WANA as called, they face two situation: 33.000.000 DHS x 5.35% = 1 765 500 / 360 days = 4 909.167 DHS. Yet, the company could pay with the same amount paid in cash: 33.000.000 DHS x 0.5% = 165 000 DHS We could realize from this calculation that with 4 909.167 DHS that the company pay using the overdraft, it could gain at the same day: 165 000 DHS if they pay in cash. A financial revenue equals to: = 160 090.83 DHS (165 000 DHS – 4 909.167 DHS) By this way, the company gets to cover the financial costs paid when the company pays using the overdraft. As a financial decision, we could’ve take this decision by comparing the annual rates that the company gets from paying in cash to the supplier or from paying by overdraft. Balances total and the total of the balances are calculated from the scales of quarterly interest that can provide on request, the banks of the enterprise in question. This assessment of the minimum amount of paid unnecessarily, bank charges form the calls the following remarks: The first term assumes that any credit balance results from an excessive discount. However this is not always true: there can be an "overfunding" permanent capital, or credit providers, compared to the capital fixed and capital needs circulating, as in the previous example. The second term assumes that any debtor balance comes from a funding challenge that leads to expect enough discount. The company often experiences periods where their discount opportunities are limited. In addition, it can be a sign of a financially too weak or inadequate. The reason behind this for the company is that, the majority of funds are deposited in a certain bank account, while the company does not benefit from all financial advantages of the company. Therefore, the company required often to increase the amount of the authorized overdraft seeing that most of the Turnover is deposited inside this bank account. The calculation of the third term is made difficult by the assessment of the second member. However, it can fix the minimum value: at a minimum, for a company using an overdraft constant throughout the year, the commission of 1/20 is 0.60% of the total amount of the overdraft. Despite its limitations, this formula has no other ambition than to quickly assess whether a more detailed analysis of the management of the enterprise in question is necessary. Added to this waste of bank charges is an opportunity cost. The reducing process of the company’s costs is based on the daily following that the company apply based on the daily report that they receive from their banks, BMCI, AWB, or BMCE. Therefore, there’s an example of the bank sheet related to the company’s movements received every morning and analyzed by the treasurer: Page 85 of 124
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The Optimization of the Cash-Treasu
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FOREWORD Nor obtaining the diploma
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This project research is dedicated
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LIST OF ACRONYMS AND ABBREVIATION
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Figure n°1: Determination of the o
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TABLE OF CONTENTS Foreword ........
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SECOND PART: THE PRACTICE OF THE CA
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ABSTRACT Inside a world full of ban
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In addition, the monetary risk is a
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A good financial situation is chara
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Experience and observation prove th
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Whereas part of stocks was practica
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C = ax² + bx + c When the demand a
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The “Stocks” flow time: Average
Page 33 and 34: It indicates to what extent the rea
Page 35 and 36: RESULTS + FINANCIAL INTERESTS / FIN
Page 37 and 38: ANNUAL SALES H.T / NET FIXED ASSETS
Page 39 and 40: 4 - LIMITS THE PREDICTIVE VALUE OF
Page 41 and 42: This opposition led to the establis
Page 43 and 44: It will similarly be to calculate t
Page 45 and 46: However, this document synthesizes
Page 47 and 48: The cash has then for each day (or
Page 49 and 50: (b) SHORT-TERM DATA: Beyond the ver
Page 51 and 52: These three presentations are well
Page 53 and 54: Manage cash consists, in the tradit
Page 55 and 56: Anyway many authors have developed
Page 57 and 58: Either they consist on interest or
Page 59 and 60: (a) Economies of scale in the deten
Page 61 and 62: Type of Risk Analyze the Risk Evalu
Page 63 and 64: They may have originated an investm
Page 65 and 66: I. PRESENTATION OF THE ANALYSIS MOD
Page 67 and 68: II. DATA COLLECTION TOOLS For what
Page 69 and 70: Part II: The Practice of the Cash-
Page 71 and 72: Page 71 of 124
Page 73 and 74: 8. Development: Currently, this dep
Page 75 and 76: B. Dynamical competition While the
Page 77 and 78: 1.2 - The existence and the importa
Page 79 and 80: December - 2014 0,00 DH 1 599 918,6
Page 81 and 82: (a) Four sources of costs can be id
Page 83: 20 000 000,00 DH Figure n°5: INFLO
Page 87 and 88: implementing rules are poorly known
Page 89 and 90: Regardless of the method chosen, it
Page 91 and 92: date, but whose amount is known (e.
Page 93 and 94: 30% of the Turnover in the fifth pe
Page 95 and 96: OVERDRAFT’S COSTS = [33.000.000 D
Page 97 and 98: 3 ° - The Customer-Loan Control Co
Page 99 and 100: Profitability is the guarantee of t
Page 101 and 102: (b) The Positive Effect. Swelling o
Page 103 and 104: 2.2 - The influence of investment o
Page 105 and 106: There are thus two sets of 12 month
Page 107 and 108: S = The starting stock (possibly) +
Page 109 and 110: This chart is reserved to make clea
Page 111 and 112: operation wasn’t beneficial enoug
Page 113 and 114: 50% is paid to the supplier 14 days
Page 115 and 116: Figure n°18: Daly Balance of IWACO
Page 117 and 118: Regarding the previous chapters, an
Page 119 and 120: THE CONCLUSION Page 119 of 124
Page 121 and 122: Investment and its financing, Trai
Page 123 and 124: BOOKS: http://tel.archives-ouverte
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