Optmization of Treasury

3 - Any increase in liability involves a cash receipt.
4 - Any decrease in assets involves a cash receipt.
5 - Any charge involves a disbursement.
6 - Any product involves a cash receipt.
But these implicit assumptions are patently unrealistic.
2 - THE LIMITS TO THE ASSIMILATION OF ACCOUNTING FLOWS TO CASH FLOWS.
The causes of the gap between accounting and cash flows result from the implicit assumptions. There are three:
Firstly, the flows recorded by the General Ledger do not match all transactions between the company and its
environment.
Then there is regulation time.
Finally, the various results that a company may release its operations do not necessarily cause body
movements.
2.1 - FLOW ACCOUNTING AND MONETARY EXCHANGE WITH THIRD PARTIES.
Flows recorded by the General Ledger are not all exchanges between the company and its environment. A job or a
load do not necessarily give rise to a disbursement; similarly, a resource or a product do translate not always by a
cash receipt.
(a) Funds applied and Funds received do not necessarily correspond to cash receipt and disbursement flows.
The changes that affect the balance sheet of a company can have two origins: they may be the result, in the first
place, of transactions between the company and a third part (customers, suppliers, bankers, etc.). In this case, Funds
Applied (such as acquisition of assets, debts, etc.) and Funds Received (such as capital increase by contribution of
money, credits, etc.) necessarily imply INFLOWS and OUTFLOWS. Secondly, the variations of certain balance sheet
items may only be the result of a game of accounting entries. Funds Applied and Received have therefore no direct
monetary consideration: it is the case of depreciation operations, establishment of provisions, revaluation of assets,
etc. These resources result from accounting flows and non-misleading no cash flow that would alter the amount of
cash.
(b) Expenses and products do not necessarily correspond to cash receipt and disbursement flows.
Can be distinguished in this regard, the cash flows of operating non-monetary operation flows. In the case of
depreciation, for example, credited to income allocations give rise to no disbursement.
2.3 - TAKING INTO ACCOUNT DELAYS IN REGULATION.
The reconstruction of the movements of cash requires taking account of shifts between flow of operations and cash
flows related to the phenomenon of credit (credit to debtors and credit by creditors). Thus to calculate the amount
of the cash receipts on sales, for example, can use the following procedure:
SALES FOR THE YEAR,
+ Receipts on sales from the previous year,
- Credits granted on sales of this fiscal year and not yet expired at the end of the latter.
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