Optimization of the company's cash flow

the good following system of the company’ accounts inside the bank get for the treasurer a plus value that allows for
the treasurer to work on extra cash or Idle cash as previously explained when it comes to paying the supplier earlier
or on cash to have the financial advantage aside. For that, the company’s relations are based on the bank’s account
and the way they are managed.
The fact that a small change or difference between the days of the inflows and outflows could influence the whole
system of the company, a small space of negotiation is allowed between the company and its banks. Although, the
negotiation is not allowed for all kind and types of companies more that it’s allowed only for few ones that make
profit on the field or make high movement on the market. A process like that, is not easy to make, especially when
the company such as IWACO; a distributer of other company. The reason behind, is that the company gain more
profit than the contracted called (commission) when they get to pay on the right time by cash, and to make that
possible to happen, they get their management on a high level but too risky and sensitive for any kind of movement.
But then. The financial managers are quiet to be asked on the WHY than the HOW.
Negotiating with banks new extra lines obliged the company to make more profit and to show on the market field
stronger and solid. Yet, to make such a thing possible to happened is by moving inside the bank’s account all cash
that the company needs, but then such a decision should be taken based on the financial studied well before getting
into the negotiating with the banker.
3.2 - THE COSTS OF BANKING SERVICES.
It is necessary that each bank is remunerated according to the reality of the services it renders to the company in its
cash management. A global balance of transactions between the company and each of its bankers is the way to
ensure that the balance is reasonable for both interested parties.
3.2.1 - OFFER OF THE COMPANY TO THE BANKERS.
There are two ways to work with banks:
The company deals with each separately, pulling the best out of competition.
Alternatively, the company forms around it a kind of "club" of banks complying with certain standards, with
which it develops together its financial policy, which is the case for the IWACO Company.
The first solution does not expect a lot of the banking system, particularly in times of hardship. On the other hand,
the second solution provides more effective support to company.
The 'Bank pool' is considered to be a group of banks familiar with the company and its problems that under the
umbrella of a 'leader', offers a range of served as wide as possible at all times. Here virtually, the company works
both with a 'pool' and banks 'non pool ". Moreover, the entry or exit of a partner is always possible depending on the
services that it can or can no longer make to society. Similarly, the relative shares of each bank inside the pool remain
not fixed once and for all, but change for the same reason. The assignment of operations between banks BMCI,
bmce Bank and AWB's 'pool' and 'outside pool can be two systems:
Assignment to each bank a percentage of corporate (movements of flow) costs, or,
Allocation to each store a percentage of revenues for the company (credit movements).
From the point of view of cash these two systems are equivalent, because ultimately the expense movements are
always equal income movements, and vice versa.
Page 88 of 124