Optmization of Treasury

grouping by nature. In principle the frequency and the time limit for payment are well known. Quite often, there
remains uncertainty as to the amount that can be still quite close. The forecast of expenditure on financial and
investment operations stems from the financing plan. The liabilities accounting complete this approach.
(b) ACCRUAL OF LIABILITIES:
Accounting for commitments is intended to allow adjustment of budget estimates. It is based on achievements: the
commitments received or given. It reveals from the source, variances between budgeted or revenue incurred or
budgeted spending and expenditures
Non-operation movements are not fix. Any company is able to identify all born commitments and their impact on
cash flow accurately. Movements of farms, on the contrary, are analyzed globally, comparing the development over
time of the commitments of expenditure and revenue from a common date.
Two parameters influence the movements of availability:
The amount of the commitment,
The time between the birth of commitment and its transformation into cash.
These information are only averages but resulting from the comparison between commitments and payments
actually made. The same analysis is performed for cash receipts. We will then search for "equalities between money
supply" regardless of conduct specific to each elementary operation constituting those 'masses '. Also has interest in
the continuation of the analysis, to seek the causes of the dispersion of individual behavior around these averages to
avoid errors of forecasts. The gap analysis allows any time corrective actions necessary to ensure the solvency of the
firm.
The method of forecast revenues-expenses, despite his great interest does not fully satisfaction.
3.1.2 - LIMITATIONS OF THE METHOD.
Experience shows that this method has major shortcomings. We will make in this regard four remarks.
1 - THE CASH FLOW FORECASTS ARE UNCERTAIN.
But this uncertainty does not have the same nature as it's more or less distant horizon data.
(a) THE DATA IN THE VERY SHORT TERM:
Most operations that result in a movement of cash are already involved. As a result, the Treasurer may theoretically
have all necessary information. In fact, it will have that mass of information. First, because the internal information
of a business system is generally not organized so all this mass information arrive. Then, it can appear to the eyes of
those responsible for the cost of the transmission of the information is disproportionate to the gain (or the economy)
expected a certain forecast. It should be noted that the improvement of the input of information is the condition first
the realization of good cash flow forecast
In addition, the cost of a bad cash management can be as compromise or at least strongly affects the profitability of
the firm. Anyway, the use of certain statistical forecasting techniques can replace when necessary, expensive looking
for additional information about committed transactions.
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