CASH MANAGEMENT
Good cash management is to ensure the solvency of the company at the lowest cost, meaning that the company must be able to pay its debts at any time, maintaining a minimum cash. It also calls, or rather to maximize the performance of its investments cash surpluses. The cash management is therefore based on the couple "security / Profitability."To address the risk of insolvency or inquidité (breakdown of cash distribution services, insolvency, etc..), The company must maintain a certain level of cash, because in practice it is very difficult to ensure perfect synchronization between receipts and disbursements. At the same time, it must be to reduce the negative impact of the profitability of idle cash by ensuring good financial investments.The main grounds for detention of cash are:* The desire to achieve the transaction in good conditions.
* The need for financial security in order to cope with economic fluctuations that result in imbalances between receipts and disbursements.* The speculative.The implementation of cash management through various stages and based on predictive models.
11-1 Implementation of cash managementThe process of cash management involves three steps:• The prediction that can cover several methods to• The necessary adjustments• Control of the cash
11-1-1 The process of cash managementThe achievement of good cash management and profitability solvency requires the combination of two types of action.* The internal actions: the forecast cash flows (cash, cash) and the choice of means to cover possible imbalance between inflows and outflows, and control of cash.* External actions: they are primarily to ensure the best conditions for negotiating banking facilities. Settlement terms of customers and paying suppliers.
a) ForecastingThe quality of the decisions taken with regard to cash management depends largely on the quality of information systems in place accounting, analytics, budgets, etc.. The quality of the forecast depends on the training base on which it stands: when the quality of accounting education or developed statistical series is small, the forecast can be established with a satisfactory degree of accuracy.
There are several methods of predicting the quality and difficulty of implementation varies.The first method is the proportional extrapolation, usually from the turnover.
Knowing the relationship between turnover and working capital, the need for working capital or cash flow for a given period, we can deduce the forecast for the following periods:
Application
CA to = 1000000, cash (to T) = 180,000
T to 180 000----- = ------------- = 18%CA to 1 million
On the assumption of proportionality, we can expect the cash sales forecast for the period T1CA d = Td = 1500 000 270 000 DH or 1,500,000 x 18%
This method is simple, but it has shortcomings: it starts from the relationFDR = T + BFR, and it therefore implies a proportional relationship between the Board and the WCR seen at one time, from the balance sheet does not necessarily reflect the exact reality of times inventory turnover or duration of credit customers and suppliers.Only an actual examination schedules of receipts and disbursements for a good looking operating flows.In small companies who can not bear the luxury of an information system cumbersome and costly, these simple methods of forecasting can be used with caution.A second prediction method is similar to the previous linear extrapolation from CAApartirde historical and statistical methods more or less elaborate, we can establish a proportional relationship between the Board and the working capital or cash flow of the type y = ax + b and it will then identify the parameters a and b of the adjustment function, we can therefore predict the level of working capital or cash.
ApplicationThe relationship between the Board and the cash is represented by the function y = 0.20 x 50 000 for a forecasted turnover of 1 000 000 DHWe have: y = 0.20 x 1000 000 + 50 000 = 250 000DH
We can consider that the parameter b (here 50 000) corresponds to cash stock-tool independent of CA
This method is subject to the same criticism as the last. In another, it assumes that the cash working capital and balance sheet are observed at optimum levels.
In practice, the low prediction methods most used are the cash budget and employs methods of contact. They will be presented in detail in the section 2next.B) The adjustments
Once the forecast, we can appreciate the forecast cash flow that will be negative (higher than the disbursement receipt) or positive (higher than cashing cashing)The company will then provide the necessary adjustments in both cases.In the first case, the cash deficit should be considered actions to fill the gap and restore the balance: demand for bank loans of cash depending on their cost and their flexibility, timely readjustment of settlement customer and supplier payment terms, increased inventory turns.In the latter case, more or less abundant cash (receipts than disbursements), the companies should consider whether the investment in the short term availability of its idle or advance payment of its debts, or the realization of investment in order to return on the funds available.In both cases, it is indirectly improve the profitability or minimizing the cost of soliciting cash loans, or maximizing the use of excess cash.
C) The control of the cashControl of the cash is intended to compare the predictions of a cash, bank loans or financial investment needed to be done with the achievements.
Diagram of the stages of the cash management
11.1.2. Cash budget:
The cash budget is the principle instrument of short-term financial forecast, it establishes for periods varying languages (year, month, week, day), the forecast financial flows and to consider adjustments to fill the gaps or to place surplus cash.
A) We use a cash: the monthly budgetThe cash budget is to describe the estimated receipts and expenditures in order to highlight the differences and anticipate measures to reduce the negative differences (cash deficit) or to make optimum use of any surplus of cash flow.In the absence of this budget and in case of liquidity problems, the company will find it difficult to imagine the fast financial solutions to address them.The budget is a means of prediction and control of the treasury of the company it is the main instrument of short-term financial forecast.DEFINITION OF BUDGET CASH
The cash budget is a statement setting out month by month or even week by week, revenues (receipts) and expenditures (disbursements) forecast of the company, and the timing of its cash needs or available cash .In the budget, a distinction is made between revenue and operating expenses (sales of goods, finished goods, raw material purchases, regulation of wages, etc ...) and non-operating income (sale of capital, repayment of loans, etc ...)Diagram of constriction of a cash budget
I
Operating activities
II
Discontinued OperationsIIII-II-III
Companies are confronted daily with cash flow problems, and emergency cash needs can be satisfied with a theoretical and doctrinal treatment, as we propose to illustrate the mechanics of cash flow through a case.
EXAMPLE OF MONTHLY CASH CONSTRUCTION D4UNThe company "X" has an accounting period which coincides with the calendar year, it wants to establish a monthly cash budget for the first half of year 1 for this purpose, it brought together the accounting document and the following information:
Assets LiabilitiesFixed assetsStockAccounts receivableStateOther receivablesAvailable 460 000120 00098000 (a)22000 (c)5000 (e)15 000Share capital 720 000ReservesDebt financingAccounts payableStateSocial security 300 000200 00090 000 (b)99000 (d)30 000 (f)1000 (g)720 000
IS 30 000 - 19 000 = 11 000a) Regulation 19N in a late January: 28,000
end of February: 35,000
end of March: 35,000b) Loan payable trimestralités 15 000 31/03et the 30/06 and the 31/12 of each year: 12% interest rate.c) It is the VAT on purchases, December 19N, to be deducted on the return to establish under a January 19N to 19N 6195 Surelle February 1 for 7823 and that of March 7982 for a 19N .d) Liabilities vis-à-vis suppliers will be paid according to the following schedule in a 19N:31/01: 49 000 99 00028/02: 50 000
e) Claim on sale of capital adjustable 30/04f) This account shall include the remainder of the company tax and VAT 19,000 to pay for operations of less than 19N in Decemberg) This amount will be adjusted January 1 19N
INFORMATIONIS the interim to be paid an amount of 19N each in 14,291
Weather forecast for the year 1 19NMonth 01 Month Data 03 Month 02 Month 04 Month 05 Month 06Sales skillsPrice H.TPurchases in amountsPrice H.TOther external expenses(V. A. T. non-deductible)Gross monthly wagesPayroll taxes and insurance 1000200-13015 000
15 00023% -20080013015 000
15 00023%2200200120013015 000
15 00023%800200210013015 000
15 00023% -200-13015 000
15 00023% 1700200110013015 000
15 00023%
* The VAT rate is 20% on sales, purchases and services, it is 7% interest on the company on the flow regime.* The condition of the settlement of customers and the following* 10% cash, 30% at 30 days end of month 30% to 60%, month-end and 30% to 90 Month-end* Purchases and external expenses are paid 60 days end of month* Wages are paid at the end of the month and the corresponding payroll next month.* The stock is equal to 30/06 at 65 000* The tax rate is 35%* The annual depreciation amount to 80 000
Elements of the correctedCollection of sales forecastCashing month plus VAT Receivables Total balance sheetWith 10% A 30% A j 30 j 60 j 90 30% A30%JanuaryFebruaryMarchAprilMayJune 240 000-528 000192 000-408 000 24 000-52 800019 200-40 800 -72 000-158 40057 600- --72 000-158 40057 600 ---72 000-158 400 28 00035 00035 000--- 52 000107 000159 800249 600216 000256 800122 400 122 400 57 600122 400 180 000122 400122 400Remaining at 30 - 06 - 19N 1 424 800
Regulations purchasesMonths amounts to 60 j VAT Regulations month-end balance sheet liabilities TotalAgainJanuaryFebruaryMarchAprilMayJuin 99000-124 800187 200327 600-171 600 ----124 800187 200327 60049 00050 000----49 00050 000-124 800187 200327 600Remaining at 30 - 06 - 19N 1 171 6000
Other external expensesMonth 01 Month Data 02 Month 03 Month 04 Month 05 Month 06 Total BalanceDisbursement chargesno wayChargesDisbursement 15000 15000 1500015000 1500015000 1500015000 1500015000 90 000 60 000 30 000
V. A. T. to payMonth 01 Month Data 02 Month 03 Month 04 Month 05 Month 06 Remaining VAT
Value added tax collectedV. A. T. deductible:On purchases and servicesCosts of financial-Credit V. A. T.V. A. T. to payV. A. T. deductibleOn purchases and servicesOf interestRemaining 40 000 to 30/06
6195
11 000
7823
33 805 88 000
7982
7823
32 000
72 195
20,800
31 811 68 000
31,200
20,800
83 20015883 358
16 000
16 000
a) deductible VAT on purchases and services: 22,000 (record) + 135,200 (purchases and services) - VAT deducted on the return from January to June (74,000) = 83,200.b) interest on loans of V. A. T.:90,000 x .12 x 7% = 3/12x 189 (first quarter)75000 x0, 12 = 7% x3/12x 158 (2nd quarter)controlDeductible VAT + VAT on the balance sheet transactions for the period TVAdéduite = balance to 30/0622000 + (135200 + 189 +158) -74189 -83358+ Interest expense purchases.Cash budget
Month 01 Month Data 02 Month 03 Month 04 Month 05 Month 06 Total ControlStarting balance
Operating revenueCollection of sales
Operating ExpensesSettlement of purchases and servicesPayment of wagesRegulation of socialFinancial expensesVAT payable
corporate taxOther external expenses
Non-Operating RevenueCashing disposal of fixed assets
Non-operating expensesDebt MaturityDeviationCumulative gap15 000
52 000
49 00015 0001000
11 000
9000
107 000
50 00015 0003450
33 805
745 +44255
159 800
15 0003450
33 29415 000
17 889167 +75912 +70
249 600
124 80015 0003450
72 195
15 0005000
155 +24+ 95 067
216 000
187 20015 0003450
31 811
15 000
- 36 46158,606
256 800
327 60015 0003450
14 29415 000
17 408-135,95277,34615 000 +
1041200 +
738600 -90 000 -18 250 -
148 811 -47 588 -60 000 -5000 +
35 297 -77 346 -
Cash Budget (cont'd)
Month 01 Month Data 02 Month 03 Month 04 Month 05 Month 06 Total ControlWage SettlementsRules of socialFinancial expensesVAT payableIncome taxOther external expenses
NON-OPERATING INCOME
Cashing disposal of fixed assets
Non-operating expenses
Debt MaturityDeviationDeviation accumulated 15,000
1000
11000
-9000 15000
3450
33805
745 +4255 -4 15000
3450
33294 (a)15000
17889 (b)167 +7570,91215000
3450
72195
15000
5000
155 +24-95 067 15000
3450
31811
15000
-36,461+58 606 15000
3450
1429415000
© 17408-135,952-77,34690000 -
18250 -
148811 -47588 -60000 -
5000 +
35297 -77346 -a) IS 19N balance. 19,000 + 19N IS a first depositb) interest due quarterly 15 000 + VAT: 2889 (90 000 * 0.12 * 3 / 12 * 1.07)c) quarterly maturity: 15,000 + interest TTC: 2408 (75 000 * 0.12 * 3 / 12 * 1.07)
The budget shows a lack of a 31/01/19N in 9200, cash positive and then becomes a deficit (23,291 as of June 1 19N), managers can anticipate the kind of solutions adequate to meet the needs (cash loans, etc.)..
Projected income statements to 30/06
SalesPurchases resold (a)Other external expensesSalaries and benefits (b)Financial expensesDepreciation (d)Profit before tax 1,140,000731 00090 000110 700495040 000163 350a) Purchases 676,000 + change in inventories (120 000-65 000)b) (15 000 * 6 * 1.23) = 110 700c) 90 000 * 12% * 3 / 12 +75 000 * 12% * 3 / 12 = 4 950d) 80 000 / 2 = 40 000Balance to 30/06Assets LiabilitiesFixed assetsStockAccounts receivableState 420 000 (a)65 000424 800 (b)11 946 ©
1,021,746 CapitalReservesProfit before taxDebt financingAccounts payableSocial agenciesStateCash-liability 300 000200 000163 35060 000 (d)201 600 (e)3450 (f)16000 (g)77346 (h)1021746
a) 460,000 - Depreciation 40,000 = 420,000b) see under budget receipts oversalesc) see under budget VAT and IS (83 358 2 installments IS / 14294 * 2)d) 90 000 - 2 trimestralités amortization of 15 000e) see under budget procurement regulations and other external expenses (171 600 + 30 000)f) social organizations on salire June to settle a 19N in July (15,000 * 23%)g) VAT payable: see under budget VAT (16000)h) See cash flow
B) Flexible budget: taking into account the uncertaintyThe cash flow forecast represents receipts and disbursements forecasts that lead to consider solutions for the balance to ensure optimal management of cash (use of financial assistance the least expensive and safest or otherwise profitable investment surpluses).
The cash budget is the culmination of other budgets (sales, purchases other expenses, resources and non-operating expenses, etc. ..). gold, both endogenous factors (productivity change, etc. ..). can disrupt the forecasts. If the company can act on the first, for cons, the latter beyond its control.
So to avoid these hazards, it is possible to adopt the method of flexible budgets and it is to establish budgets vary depending on several assumptions, usually three in number: optimistic (high level), medium (level likely ) or pessimistic (low).
For example, for a given level considered likely, we can construct two budgets: one optimistic, in which the forecast is higher than 15% for example, and the other pessimistic, in which they are lower 15%.
This method allows some flexibility in the estimates and therefore anticipates several possible solutions.
Other methods take into account the uncertainty by using the calculation of probability.Although intellectually appealing, it is difficult to implement.
C) the cash flow by the method of supply-useWe had the opportunity to verify the relation:. = CashRecall that:F. DR = permanent financing - Fixed assetsBFR = Current assets excluding cash - current liabilities excluding cashThe cash flow by the method of supply-use situation is to establish monthly forecasts, determine working capital, the need for working capital and, by difference, the corresponding net cash forecast. Where there are non-operating items, can be determined separately F. And R. O. B.F.R. and operating cash.
The sum of operating cash and give non-operating net cash.Let us illustrate this method with an example, in comparison with the method of collection - disbursement.
For the company "ALPHA", we have the following information:Balance sheet at 31-12-19NAssets LiabilitiesNet fixed assetsStock of goodsAccounts receivableState-deductible VATOther receivablesBank 200 00095 000105 00019 200350027 300450,000 EquityDebt financingAccounts payableStateSocial agenciesOther creditors 190 00080 000120 00020 500650033 000450 000A cash balance sheet items relating to:a) 1 / 3 in January and third in Marchb) January (5600), February (4600), March (8800)c) March (1000)d) Loan payable in equal annual installments on 31/12 each yeare) January (35 000) February (30 000) March (55 000).f) VAT payable in respect of operations in December 19N (10500) IS remainder 19N: 10 000g) in January (6500)h) February (15 000) March (15,000)
Forecast (19N +1):salesJanuary February March dataH.TV. A. T. 200 000400001800003600025000050 000
PurchasesJanuary February March dataH.TV. A. T. 130 000260001600003200015000030 000
Other external expensesJanuary February March dataH.TV. A. T. 80001 14 600 0002 9 800 0001800• February: acquisition of a machine HT 40000V. A. T. 8000• Monthly wages 20 000 DH; payroll 28%• Method of PaymentCustomers 30% cash,70% 30 days end of monthSuppliers 50% cash50% 30 days end of monthOther external expenses cashSuppliers of capital 50% at 30 days end of month• wages are paid in the month and the corresponding payroll next month.• Gross margin = 50% commercialSpecific tax:• Annual deductible depreciation is estimated at 36 000• the rate of I. S is 35%• For the VAT, the company is subject to the flow regime and the rate is 20%• The IS at 19N for the year amounted to 120 000.
THE METHOD OF RECEIPTS - DISBURSEMENTS: MONTHLY BUDGET CASH
BUDGET ENCAISSMENTS SALESJanuary February March Balance balances at 1 31/03/19N Total TTC72 000--7200016800064 800-232 800 -151 20090 000241 200 --210 000210 000 240 000218 000300 000756 000
BUDGET ON PURCHASES DECAISSMENTSJanuary February March Balance balances at 1 31/03/19N Total TTC76 000--78 000 78 00096 000-174 000 -96 00090 000186 000 --90 00090000156000192 000180 000528 000
BUDGET other external expensesJanuary February March Balance balances at 1 31/03/19N Total TTC9600-- -16 800- --10 800 --- 960016 80010 800
BUDGET V. A. T. payable (a)January February March Balance Sheet Data at 1 31/03/19NV. A. T. deductible VAT payableVAT collectionDeductible VATBalance 31/12/19NOn purchasesOf external loadsOn capitalVAT payable 40,00056005600
10 500 36 00023 400480013 0001600400034 400 50 00044 600880029 0002800400012 600 47 800 (b)
5400For the procedures, see Chapter fiscalDeductible VAT, balance of month + VAT deductible on operations of the Month - VAT deducted on tax return = balance input tax:Janvier 19 200 + 25 600-5600 = 41 200Février 41 200 + 42 800-23 400 = 60,600Mars 60 600 + 31 800-44 600 = 47,800
Cash budgetTotal data TTC January February March 31/03/19N a balance ofI RECEIPTSOn salesJanuaryFebruaryMarchOn balance sheet itemsCustomers to 31/12Other receivables 864 500
240 000216 000300 000
105 0003500 107 000-72 000--
35 000- 267 800
168 00064 800-
35 000- 277 200
-151 20090 000
35 0001000
--210 000
-2500II DISBURSEMENTSPurchasesJanuaryFebruaryMarchSuppliers to 31/12Other external expensesCompensation duePayrollSocial agencies to 31/12State to pay VATState remaining ISOther creditors to 31/12Suppliers of capital 952 400
156 000192 000180 000120 00037 20060 00016 800650062 90040 000 ©33 00048000159600
78 000--35 000960020 000-650010 500--- 319 800
78 00096 000-30 00016 80020 0005600-34 400
15 00024000369000
-96 00090 00055 00010 80020 0005600-12 60040 00015 00024 000
--90 000---5600-5400-3000-CASH BALANCES III 52 000 52 000 91 800Cumulated balance 25 300 77 300 169 100 169 100© IS 31/12 balance. 10000 1 st deposit IS 19N +1 (120000 / 4)
Projected income statement in a 31/03/19NSalesPurchases resold (a)Other external expensesStaff costsDepreciation (b)Profit before tax 630 000315,00031,00076,8009000198 200a) PR Sales = 63,000 * (100-50)% = 315,000Closing stock = opening stock + purchases - sales 220,000 PRChange in stocks = 95000 - 220 -125 000 000 =Purchasing inventory change = ± purchases resoldPurchases - 125,000 = 315,000 = 440,000 purchasesb) 36 000 * 3 months
-------------------- = 9000
12 months
Supply balance in a 31/03/19NAssets LiabilitiesFixed assetsStock of goodsAccounts receivableState (b)Other receivables 231 000 (a)220000210000778002500
741,300 EquityProfit before taxDebt financingAccounts payableState to pay VATSocial agenciesOther creditorsLiability cash190 000198 20080 00090 000540056003000169 100741 300
a) + 20000 40000-9000 = 231000
+ a new purchase - depreciationb) input tax (47,800) + the first installment on IS (30 000)
THE METHOD OF EMPLOYMENT - RESOURCES
Income statement monthly forecastJanuary February March dataSalesPurchases resold (a)Other external expensesStaff costsDepreciationProfit before tax 200 000100 000800025 60030006340018000090 00014 00025 600300047400250000125 000900052 600300087 400
Change in stockJanuary February March data
+-= Initial stockPurchasePR Sales (sales * 50%)Ending Inventory 95,000130 000100,000125 000 125 000150 00090,000195 000 195 000150 000125,000220 000
Cash Budget: A method of supply-useData 19N December January February MarchI F.D.RCapital (a)Fixed assets (b) 70 000270 000200 000 136 400333 400197 000 146 800380 800234 000 237 200468 200231 000WCR II (AC-PC)Current assets (excluding cash)StockTrade receivables ©State (s)Other receivablesCurrent liabilities (excluding cash)Accounts payableState (s)Social agenciesOther creditorsSuppliers of fixed assets 42 700222 70095 000105 00019 2003500180 000120 00020 500650033 000- 161 700407 700125 000238 00041 2003500246 000 163 00044 400560033 000- 224 100445 300195 000186 20060 6003500221 200151 000226 0005600180 00024000406300510 300220 000210 00077 8002500104 00090 0005400560013 000-NET CASH III (I-II) 27 300 -25 300 -52 000 -169 100Change in cashCumulative change 52600-52 600 -52 000-104 600 -91 800196,400(A) profit before tax was included in the capital structure is that the tax paid on deposits offset the IS due on this result(B) net fixed assets of the previous period + acquisitions - output-depreciation(C) credit balances from the previous period + receivables transactions for the period (see budget receipts)(D) + VAT deductible interim IS(E) + VAT to pay any remainder of the year 19N
The cash budget based on the method of flow (supply-use) is a highly speaking of the financial provision in the short term, because it combines both elements of cash flow forecast, profit and loss accounts and the forward estimates.
It highlights the different elements that influence the variation of FDR, working capital and thus the cash.It is also possible to study the variation of the projected cash following table constructed on the basis of:* Profit and loss forecast in a 31/03/19N* Comparison between the balance sheet and 31/03/19N 1 31/12/19NNetDepreciation and amortizationCash flowDistribution of dividendsFlowRepayment of loanInvestmentsChange in working capital 198 200 +9000 +20720002072000-40,000167200Assets (excluding cash)Change in stocksChange in accounts receivableChange account status (active)Change in sundry debtors accountCURRENT LIABILITIES (excluding cash)Change in accounts payableChange Account Status (liability)Change in account social agenciesChange in account other creditorsChange in working capital000 +125000 +105600 +581000
- (-30,000)- (-15,100)- (-900)- (-30,000)363,600
III CHANGE IN CASH (I - II) 196 400Appendix tax
Mechanisms for calculating and paying VAT
Companies whose annual turnover exceeds 1 million DH are subject to the reporting of monthly, others are subject to the system of quarterly reporting.
Determination of VAT payable
VAT payable in respect of a period = output tax in respect of the period - VAT deduction (the same period).
VAT paid for goods and services is deductible with a lag of one month. VAT on capital is deductible in the month in which the event giving rise to the deduction arose.
* The eventthere are two regimes: the regime of flow (delivery, which generally coincides with the billing) and regime receipts.
VAT collected (oversales)For the flow regime, the event of VAT (due date) is represented by the invoice. However, payments received are taxable, even in the absence of delivery or billing.Receipts for the regime, the due date coincides with the receipt of full or partial amount of the sale (the VAT is due on the actual receipt).
Deductible VATWhatever the plan, the event is represented by the payment date.
* The calculation of the VAT payableVAT payable for the month = N (VAT collected on sales of the month N) - (input tax on purchases of goods and services of the month N-1) - (VAT deductible on purchase of capital assets of the month N).
* The payment of VATVAT due in respect of a period must be paid before the end of the month following that period.
APPLICATIONA company is subject to the flow regime for VAT and has made the following (VAT rate 20%)January 19N.
Purchases of raw materials paid by check: 50000, VAT = 10 000Purchases of services paid by check: 10 000; VAT = 2000These purchases are made during the month.
Month of FebruarySales HT = 100 000, VAT = 20 000Contents purchases paid by check (cash) HT = 30 000; VAT. 6000
Buying a machine paid in cash HT = 7000; VAT. 1400
VAT to be paid before 31/03/19N for operations in February of 19N:
VAT collected 20 000Deductible VAT 10,000- 2000- 1400VAT payable 6600
Some report on corporate tax and the modalities of payment. The industrial and commercial enterprises operated as companies are subject to corporate tax (IS) on their profits, the going rate is 35%.Companies subject to corporation tax must be paid no later than 31/03, 30/06, 30/09 and 31/12 of each year four equal installments at 25% each of the SI in the previous year. For companies whose fiscal year coincides with the calendar year, the regularization of the IS occurs at the time of the declaration of results (no later than 31/03). If the amount of IS is superior to four advance payments, the company must pay the supplement, in the case (excess of payments on the SI) it will charge four or deposit (s) next (s) on the excess .
APPLICATIONEither the company "X" that closes its accounts on 31/12. for the year N.IS N = 130 000Advance payments in N: 25000 * 4 (ie N-1 IS = 100 000)Regularization IS N: (130 000 - 4 * 25 000) = 30 000 to pay prior to 1 31/03/19NFirst installment to be paid before 1 31/03/19N under 1 year N: 130 000 / 4 = 32 500(Payment of the second, third and fourth installments prior to 30/06, 30/09 and 31/12, or 32 500 each).
11.1.3 Cash and cash on the day "zero"
In the cash budget, forecasts are made in terms of money Flus (weekly, monthly, quarterly and annual). The financier is faced daily with decisions relating to arbitration between the various means of payment (cash, bank transfer, effects, etc.). And between jobs and the allocation of resources to different banks that manage the accounts of the undertaken . therefore, the information available to the financier must be very detailed.
The purpose of the cash on a daily basis is to minimize the cost of short-term financial resources (cash loans) and eventually to optimize the return on idle cash. The constraints that must suffer the financial are numerous: background flux random variety of conditions in bank funding costs and deposit rates, etc..
To achieve this goal, the financier should move towards a "zero cash."
Indeed, traditionally, some consider that a good credit should be reflected in a good liquidity reduced, ie by the ratio:Treasury------------------ 1Short-term debt
This principle is not sound because it goes against the demands of profitability: a bloated cash means u win mark for the company, since funding may be placed either in the short term and report financial products, be invested in profitable projects. By cons, a large cash deficit means the charges incurred significant financial profitability and constitutes a danger to the financial autonomy of the company.One way to improve the pace of inflows and lower the cost of using cash loans is to reduce the funding of transit.Payment by checks of customers in different cities of the Kingdom to lead the company two types of delays:The first is the deadline for the delivery of the check from the client to the company, if done by mail, may require a few days;The second concerns the time required for the payment by the clearing house which is several days (up to five checks out place).
To reduce these delays, the company may appoint a representative to collect checks and to submit to the compensation on the ground in remote towns. The funds deposited in an account are available quickly to the company, which may also apply for transfer to his bank account at head office.In addition, cash management requires the day to make provisions in terms of "value days" taken into account by the bank, which are different from the recording dates of operations, so for example, presented a check on site to the bank to offset the 1 / 01 will be the value date of 3 / 01 (or J +2).
11. The two different short-term loans
The short-term loans relate to funding of the operating cycle. They are generally classified into two categories: funds mobilization receivables and cash loans. There are a multitude, their costs are variable and often high. We will be reviewed in the main short-term loans.
A) The funds mobilizationThe company that sells on credit to its customers receive practice of bills of exchange (drafts) or promissory notes of maturity claims materialize.
Commercial discountIf the company feels needs cash, it may subject to the authorization granted by the bank to raise it the debt matures, it holds about its customers: it is said to discount the effects.By the technique of discounting, the company gives effect to the banker unmatured and thereby transfer the debt to him. In return, it makes available a sum of money corresponding to the nominal effect, net of fees and interest calculated on the period up to maturity. This sum corresponds to some extent to the present value of the claim.The discount credit granted to the company is usually with a cap for the full amount of the effects that the company can expect.For the banker, this type of credit risk is relatively low: the effect corresponding to a commercial transaction with the outcome at maturity (payment by the drawee: the client) will repay the advance money paid by the banker . In addition, the negotiable instrument law protects the recipient of the effect. For the company, it is a technique of credit relatively flexible. Obtaining discount credit can be easy when the reputation and solvency of the "learned" are established.The company have the opportunity to get their client the cash settlement, with a cash discount (x%) should compare the cost of the latter with the discount of commercial paper to the banker.
Application
Assuming that customers of a company can pay bills by 75 days effects or cash, less a discount of 2% and the interest rate applicable to the discount market is 11.5%For an effect of $ 100,000 DH which is the best solution?Cash discount: 00 100 * 2% = 2000; Net = 98 000The company gives up to 2000 have a total of 98 000 for 75 days, corresponding interest rate:2000 360J
X = 9.80%75j 98 000compared to the 11.5% rate applied to bank told the company would not have interest to prefer payment by expected effects
FINANCING OPERATING ACTIVITIES
Exporting companies have specific needs for financing their operations with foreign countries:• Prospecting Market• Operations of manufacturing goods for export: raw materials, manufacturing costs, storage, export, and this often, settlement periods longer or shorter customers.Financing needs arising from the operations of physical production and export may be a short or an advance on goods.
Commercial paper
This is a relatively flexible and simple partial funding of a need for working capital. For short-term needs, the company through a bank may make loans from individuals or other businesses that have excess liquidity.These are the companies that issue the borrowing commercial paper through a bank, which will honor the ticket maturity (80%) if the issuer is in default.
FACTORING FACTORING OR
This technique brings together the company and the factor. It buys the company's receivables for the amount minus a commission representing the remuneration of its services.The factor takes the place of business for the account management "clients."As the company discharges the risk of insolvency, it is normal for this type of loan is more expensive than traditional solutions.
B) The cash loans
Cash loans or short-term loans are well suited for financing operational needs on time and casual.The company does not support the interest for the short-term use of short-term loans. While the release of an average long-term credit would support the business interests, even though it actually would not use these credits.The main forms of cash loans are the easy cash and short.
FACILITY CASHThe overdraft facility is a credit in the short term designed to bridge the gaps between very short collection and disbursement: Some examples of facilities granted last month to pay salaries. In all cases, the use of these credits must be short (some days).The company as the banker should ensure that the overdraft facility does not turn into cash credit permanent and is expected to fund a structural deficit of cash.
OR DISCOVERED THE ADVANCE IN CURRENT ACCOUNTDiscovered the main function to ensure cash flow requirements in the short term is for example the case of a company that wants to enjoy a good opportunity to buy stocks. This sudden need for cash will be offset quickly by the largest cash flow or the absence or reduction of normal disbursements during the following period.In practice, a company that has an overdraft is authorized to debit his account of amounts in excess of the values they are filed.
CREDIT - RELAY SOLDER OR CREDITWhen a company expects significant revenue (sale of an asset capital increase, loan, etc.) it may apply to the bank a bridge loan that allows it to betroth his needs (investment, etc. .. ) until the cash.
FINANCING OPERATING VALUES (STOCK)Companies can also finance their stock by seeking short-term bank credits. As collateral, banks may require collateral on stocks with or without delivery. These cash loans take many forms:• The seasonal creditThey are intended to finance the needs of companies whose business is seasonal (eg agricultural supply canneries during the short harvest periods).
• Advances on goodsIt corresponds to cash advances to cover part of major stock made by companies.Stocks can be pledged in favor of the banker. They are deposited either in a facility (such as general stores), or at the premises of the enterprise.
• Advances on warrantsStocks financed by the bank can also be deposited in the general stores, establishment regulated by Royal Decree. These institutions are responsible for the goods deposited and receive compensation for their care.It is given to the applicant a receipt order conferring the right of ownership and a warrant in order that authorizes the pledge of the stored goods. Both are likely to be endorsed.382in particular, at the time of obtaining the goods ahead of the owner endorses the benefit of the banker as the warrant of goods (pledge).There are several forms of advances on goods adapted to different sectors (cereals, canning, etc ...)
The documentary credit
The development of international trade, the removal of economic operators (importers, exporters) require them to observe safety rules to ensure the successful completion of the transactions.The shipper must produce documents relating to the goods exported:• The commercial invoice in multiple copies.• Documents relating to the shipment (mainly of lading, consignment note or air waybill, etc ...)• Documents showing the characteristics of the goods exported (certificate of origin, note weight and packing, etc.).To set the documentary credit, we can adopt the terms used by the Chamber of Commerce (ICC):• The documentary credits call arrangements, whatever the name or description, under which a bank (issuing) acting at the request and instructions from a client (customer).• Is required to make a payment to a third party (beneficiary) or to the order, or pay or accept bills of exchange (drafts) drawn by the beneficiary.Or• To authorize another bank to effect such payment or to pay, accept or negotiate bills of exchange against presentation of stipulated documents, provided that credit conditions are met.The documentary credit guarantees to the importer, that the documents relating to the shipment arrived safely and comply with its conditions to the exporter that the agreed price will be fixed.However, the importer is not provided on the merchandise is quite consistent with what he ordered.The importer's bank that is committed to pay the supplier may either block the amount of the invoice dan the customer's account or to grant a full or partial credit (provisioning not only in the amount of credit or documentary provisioning part only)
C) The bonds or credits by signature
The issuance of a bank guarantee does not translate into a cash advance, the bank simply lend his signature. This is essentially the case of administrative guarantees required in connection with the procurement and execution of public procurement and customs bond required when importing goods temporarily suspended customs duties.
ADMINISTRATION BONDS
They are three in number:• The deposit draftIt is required of any bidder in a public contract, and is intended to guarantee its moral commitment to fulfill the contract if it would be declared successful.• The security for theIn case of award of the contract, the surety bond replaces the final draft, it is intended to ensure the proper completion of the work certified by the final acceptance by the Administration, the amount of this deposit is generally equal to 33% of the market .• The deposit for performance bondIt is intended to ensure the proper execution of the work and protect the administration against defects or defects.
Customs BondThese are bonds issued by the bank on behalf of the company importing or exporting the benefit of the customs administration and intended either to defer the payment of Customs duties and taxes, or to suspend their fate to the achievement of a condition precedent (for home use, re-export of temporarily imported goods, etc. ..)Some deposits for import transactions, other export operations, some have resulted in deferring the payment of fees, others to avoid payment of duties, the main are:• Guarantees that differ the payment of fees- The credit removalto facilitate the movement of goods in ports, the customs authorities may issue 'passed away' after verification of imported goods, but before the liquidation rights.The benefit of this plan is subject to an application with a bank guarantee for the payment of duties and taxes within 15 to 30 days maximum after the date of removal of goods.- The obligation bondedThe payment of duties and taxes for bonded obligation to the company to defer payment of 30.60 or 120 days with an increase at a rate fixed by decree of the Ministry of Finance.The requirement takes the form of u bonded promissory note, signed by the importer and approved by the bank.- Acquired the bond or deposit in transitgoods entering for example on the national territory in Tangier, while the office of customs clearance is Casablanca, can move between the two cities' bond "provided strict rules set by the administration.This is subject to the production by the importer of a security acquired in transit or deposit.- Bonds to the warehouse (warehouse)This scheme allows the company to import and store suspension of customs duties and taxes, and for a period determined, of goods not intended to be put to use immediately.The warehouse can be public or private, authorized by the customs administration.• Guarantees that allow the two following plans:- The temporaryThe scheme allows exporters to import suspension of customs duties, materials or goods to be processed or to receive further processing before being exported.The amount of duties and taxes is subject to the issuance of a bank guarantee, the release of which is given by the Customs after re-export of goods.- The temporary importationIt applies to goods imported into Morocco and to stay there for some time without undergoing any processing before being exported.For example, it concerns: property (material items) for fairs, exhibitions and conventions, packaging for receiving goods to be exported, vehicles providing international road traffic, etc..
THE FATE OF CAUTION
Where the conditions set by the administration are filled, the company obtained the release of sureties. Otherwise, the company and the deposit (bank) will be required to pay, depending on the situation, rights and duties of the security objects, as well as increase penalties and delay often important.In addition to the reported securities, it is there are other less commonly used.
11.3 The banking conditions and tradingwith the opening of the national economy and the gradual liberalization of trade, monetary authorities have progressively allowed a degree of initiative to the market in setting interest rates.Banks are supporting businesses in addition to the nominal rate, fees and commissions apply to a variety of banking and value dates different from the actual dates. As a result, the nominal rate of credit rarely translates actual rate borne by the company.
11.3.1 The rates, fees, costs and value datesthe interest rate for cash loans common (uncovered overdraft facility) is located at 11.5% at this rate is usually added a commission found as illustrated in the example below:Rate 11.5%Commission found 0.5%11.0%as appropriate, other charges may be added to the interest so calculated.In fact, we shall see that the actual rate borne by the company is different from the nominal rate because of game-day value.Depending on their size and importance of the movements of their bank accounts, companies can negotiate lower interest rates applied by the bank and / or development of value dates.Value dates applied to banking (payment of cash withdrawals by check, etc.) are different registration dates accounting for these transactions.For example, cash paid on the day "J" (trade date) will have the value date "J 1" (or next day. "
Nature of the transaction value Observation DateCash paymentRemoving a species JJ-1 business daysWorking daysPayment of checkOn bodyOn the spotOff-site (HP)
Moves bankable (A)
Moves up non bankableAbroadJ1 +2
12 J15 J20 JDay of surgeryWorking days
Calendar daysCalendar daysCalendar daysHP rebate check discountPlace bankablePlace non-bankable10 J12 JCalendar daysCalendar daysTransferOn the spotOff-siteJJJ aDay of surgeryDebited to the accountCredited to the accountWithdrawal of cash (check or transfers) J-1 business daysDelivery of collection itemsOn the spotOff-site
Place bankable
Place non-bankableJ 5
12 J15 JCalendar days
Calendar daysCalendar days
a) Existence of a clearingSource: Bank Al Maghrib. Regulatory Decision No. 16
11.3.2 The actual cost of creditthe cost of credit due to a combination of the application of nominal interest rate and the count value days.
A) The bank overdraftTo understand the mechanism of day values, we give below an example:
CALCULATION OF AGIOS
Movement of the bank account of the company "X"Value date Debit Credit Balance Days NumbersDay month year Creditor Debtor Accounts Receivable Accounts Payable31080615January 1802030303 NNNNN400150
200 300
400100250
50300
150 826931326002250
650 2400
450
March 31 5500 N 3750
This date differs from the date of registration symmetrical accounting of the company.Interest, which will be added fees amount to:Many debtors * Interest Rate5500 * 11.5%--------------- = 1.7 569 DH360 days
CALCULATION OF THE ACTUAL COST OF DISCOVEREDIn the previous example, the calculation of premiums was made by applying the nominal and based on daily values. In fact, in addition to his regular pay rate (+ commission), the banker makes a profit on the difference in time between the date of the operation (J) and the value date (T +1).
Suppose that the bank gives the company an X discovered the first in January at a rate of 11.5% to meet the deficit, the company pays on the spot checks on January 20, the bank will calculate the interest on 22 days when given payment, the company will have benefited from that found for 20 days. The actual rate will be 11.5% but not:
22 daysX 11.5% = 12.65% ------------
20 days
If we take the case of a company with a turnover amounting to 00 250 000 DH is represented by checks out place (J 12) and found that the rate is 14%, due to the additional days values amounted to:250 000 00 * 0.14 * 12/360 = 1,166,667 J DH, which is not negligible.
B) the actual cost of the discountThe value date for the discount coincides with the day of surgery.Take the example of a company that has an effect of DH 200,000 at maturity of March 31, 1 February, the company expected the effect by its banker credits the bank account the same day. If the company had submitted the bill for collection, the value date was April 5 (J 5).
In the first case, the term of the loan discount is 59 days in the 2nd case (collecting) the downtime of the receivable is 64 days (59 + 5).
If the nominal rate is 11.5% the real rate of discount be apparent to 11.5% * 59/64 = 10.60% is will be advantageous compared to the nominal rate.
SELF-EVALUATION
1. what is the importance of cash in the life of the company?2. what is the way to predict and anticipate cash flow problems?3. that is what a flexible budget?4. What are the elements that explain the difference the nominal rate is the actual rate of cash loans?5. what is the impact of day value on the cost of cash loans?
CAS1 *A company generates annual sales of HT DH 6000000 VAT rate is 20%, 10% of customers pay in cash, 90% are settled by effect 90 days from date to date. What is the amount of discount credit which the company can appeal?CorrectedCA HT = 6000000 DH, 20% VAT, CA TTC = 7200000 DHAverage amount of receivables from customers7.2 million * 90/100 * 90j/360j = 1620000 DHmaximum amount that an engagement with the bank: 1620000 DH
2 *A business overdraft from January 1 to January 18, the date on which it pays to fill up on checks returned by its customers: the rate charged by the bank is 12%. What is the actual rate borne by the company?CorrectedFor the payment of checks, the date of value is equal to J 2, the company is supposed to be open for 18 days (from 01/01 to 18/01), plus 2 days (d "date setting value for the delivery of checks), a total of 20 days found.Therefore, the actual rate of the overdraft is:Real rate = 12% * 20/18 = 13.33%A company gives a discount to both effects following 19N March 28:* Effect of 166,440 DH: May 5 deadline 19N* Effect of 250,000 DH: May 25 deadline 19Nthe discount rate 11.5%, 7% VAT, plus a handling DH effect.Calculate the interest withholding by the bank.
CorrectedEffect of 166 440 DH: duration of 39 days (28/03 to 05/05)Interest 166,440 * 11.5% * 39/360 = 073.56 2 DHHandling fee: 1 DHEffect of 250 000 DH: 59J period (28/03 to 25/05)Interest 250,000 * 11.5% * 59/360 = 711.80 4A handling fee DHAgios (2 073.56 + 4 711.80) 6 785.36 DHDH 2.00 handling fee6 handling fee 787.36 DHHT DH 475.12VAT 7% 7 262.48 DH
4 *to determine the cash flow the first six months of a 19N, the financial manager of the SA "Malta" has the documents is the following information:
Balance sheet at 31/12/19NNet Liabilities Amount AssetsProperty and equipmentFinancial assetsStocks of goodsAccounts receivableState (tax deductible)Other receivablesAccrued assetsBank 250 0007500487 500169,750 (a)36750 (b)25 000 ©850015 0001 million capitalLegal reserveOther reservesDebt financingAccounts payableStateOther creditorsAccrued liabilities 308 00015 000122 000210 000232 50039000 (e)26750 (f)46 7501000000
(A) 30% will be paid January 1 19N, 30% in February and 40% in March(B) corresponds to the cost of purchasing and December 19N deductible in equal shares in February, March and April(C): 20 000 will be paid in February and the remainder in March(D) shall be paid in January (third), February (third), March (third)(E): VAT to be paid late January 17000 balance of the corporate tax to pay the 31/03/19N 1: 22,000 the amount of IS in the financial year amounted to 19N 82 000.(F) will be set as follows: in January 8000, 10,000 in March and the rest in July 1 19N.
The company is subject to the flow regime for VAT, the rate of corporation tax is 35%The provisions established are:
Sales tax (VAT 20%)Data January February March April May JuneHT120000 VAT24000 14000028000 155 000.31000 17000034000 11000022000 18000036000
PurchasesData January February March April May JuneHTVAT 6000012000 7500015000 8200016400 8000016000 9000018000 6200012400
Terms and conditions:* Settlement of clients: 30% cash, 10% and 60% 90J 30j (end of month)* Payment of suppliers: 50% to 60J and 50J to 90J (end of month)personnel costs are estimated at 35 000 DH / month and are paid at the end of the month.Payroll related accounts for 28% of the dirty and are adjusted the following monthThe annual depreciation of capital assets is estimated at 54,000 dirhams. Other external expenses are estimated at:January February March April May June17 850 16 660 21 420 23 800 26 180 15 470It is paid in cashA partner will supply 1 January current account of 50 000. The purchase of a machine is scheduled for April and will be paid in May, took HT = 40,000; VAT = 8000The margin on purchase price represents 40% of sales.You are required to establish the monthly cash budget for the first six months of a 19N. establish the income statement and balance sheet estimates at 1 31/06/19N.
CorrectedCashing projected sales
Month plus VAT Collection Debt Total Balance SheetWith 30% A 10% 30d 60% 90J AJanuaryFebruaryMarchAprilMayJune 144 000168 000186 000204 000132 000216 000 43 20050 40055 80061 20039 60064 800 -14 40016 80018 60020 40013 200 ---86 400100 800111 600 50 92550 9256790094 125115 725140 500166 200160 800189 600AprilMayJuneRemaining 30-06-19N 1 122 40079 200151 200352 800
Disbursement forecast on purchasesMonth plus VAT Collection Debt Total Balance SheetWith 30% A 10% 30d
JanuaryFebruaryMarchAprilMayJuin 7200090 00098 40095 000108 00074 400 --36 00045 00049 20048 000 ---36 00045 00049 200 77 50077 50077 500--- 77 50077 500113 50081 00094 20097 200
Remaining 30-06-19N 1 45 000108 00074 400230 400
Disbursement on the corporate taxData January February March April May JuneRegularization IS-19NFirst installment IS. 19N a2èmeacomptes IS. 19N 1 22 000 (a)20500 (b)
42500
20500 (b)20500(A) of the remaining IS 19N as liabilities(B): 25 SI of 19NVAT on disbursementsJanuary February March April May June VAT ClearanceA deductible paidVAT collectedDeductible VATIncluded in the assetsOn purchasesFixed assetsVAT payable
28 000
17 000 ©28 000
12250 (a)
24000 (d)31 000
12250 (a)
15750 (d) 34,000
12250 (a)6000 (b)
18750 (d)
12 000
13500 (b)800015750 (d)36 000
15700 (b)
500 (d)
54600 (e)
20300 (f)(A) contained active (VAT)(B) VAT on purchases disbursed (36000 * 0.16667 = 6000), 81 000 * 0.16667 = 13,500, 94,200 15,700 * 0.16667 =(C) payable for December 19N(D) To pay for operations of the month preceding(E) VAT stock (36,750) + VAT on purchases of goods services and capital assets (97,800) - VAT deducted on return from January to June (79,950) = 54,600(F) To be paid before 1 31/07/19N for operations for the month of June
Good cash management is to ensure the solvency of the company at the lowest cost, meaning that the company must be able to pay its debts at any time, maintaining a minimum cash. It also calls, or rather to maximize the performance of its investments cash surpluses. The cash management is therefore based on the couple "security / Profitability."To address the risk of insolvency or inquidité (breakdown of cash distribution services, insolvency, etc..), The company must maintain a certain level of cash, because in practice it is very difficult to ensure perfect synchronization between receipts and disbursements. At the same time, it must be to reduce the negative impact of the profitability of idle cash by ensuring good financial investments.The main grounds for detention of cash are:* The desire to achieve the transaction in good conditions.
* The need for financial security in order to cope with economic fluctuations that result in imbalances between receipts and disbursements.* The speculative.The implementation of cash management through various stages and based on predictive models.
11-1 Implementation of cash managementThe process of cash management involves three steps:• The prediction that can cover several methods to• The necessary adjustments• Control of the cash
11-1-1 The process of cash managementThe achievement of good cash management and profitability solvency requires the combination of two types of action.* The internal actions: the forecast cash flows (cash, cash) and the choice of means to cover possible imbalance between inflows and outflows, and control of cash.* External actions: they are primarily to ensure the best conditions for negotiating banking facilities. Settlement terms of customers and paying suppliers.
a) ForecastingThe quality of the decisions taken with regard to cash management depends largely on the quality of information systems in place accounting, analytics, budgets, etc.. The quality of the forecast depends on the training base on which it stands: when the quality of accounting education or developed statistical series is small, the forecast can be established with a satisfactory degree of accuracy.
There are several methods of predicting the quality and difficulty of implementation varies.The first method is the proportional extrapolation, usually from the turnover.
Knowing the relationship between turnover and working capital, the need for working capital or cash flow for a given period, we can deduce the forecast for the following periods:
Application
CA to = 1000000, cash (to T) = 180,000
T to 180 000----- = ------------- = 18%CA to 1 million
On the assumption of proportionality, we can expect the cash sales forecast for the period T1CA d = Td = 1500 000 270 000 DH or 1,500,000 x 18%
This method is simple, but it has shortcomings: it starts from the relationFDR = T + BFR, and it therefore implies a proportional relationship between the Board and the WCR seen at one time, from the balance sheet does not necessarily reflect the exact reality of times inventory turnover or duration of credit customers and suppliers.Only an actual examination schedules of receipts and disbursements for a good looking operating flows.In small companies who can not bear the luxury of an information system cumbersome and costly, these simple methods of forecasting can be used with caution.A second prediction method is similar to the previous linear extrapolation from CAApartirde historical and statistical methods more or less elaborate, we can establish a proportional relationship between the Board and the working capital or cash flow of the type y = ax + b and it will then identify the parameters a and b of the adjustment function, we can therefore predict the level of working capital or cash.
ApplicationThe relationship between the Board and the cash is represented by the function y = 0.20 x 50 000 for a forecasted turnover of 1 000 000 DHWe have: y = 0.20 x 1000 000 + 50 000 = 250 000DH
We can consider that the parameter b (here 50 000) corresponds to cash stock-tool independent of CA
This method is subject to the same criticism as the last. In another, it assumes that the cash working capital and balance sheet are observed at optimum levels.
In practice, the low prediction methods most used are the cash budget and employs methods of contact. They will be presented in detail in the section 2next.B) The adjustments
Once the forecast, we can appreciate the forecast cash flow that will be negative (higher than the disbursement receipt) or positive (higher than cashing cashing)The company will then provide the necessary adjustments in both cases.In the first case, the cash deficit should be considered actions to fill the gap and restore the balance: demand for bank loans of cash depending on their cost and their flexibility, timely readjustment of settlement customer and supplier payment terms, increased inventory turns.In the latter case, more or less abundant cash (receipts than disbursements), the companies should consider whether the investment in the short term availability of its idle or advance payment of its debts, or the realization of investment in order to return on the funds available.In both cases, it is indirectly improve the profitability or minimizing the cost of soliciting cash loans, or maximizing the use of excess cash.
C) The control of the cashControl of the cash is intended to compare the predictions of a cash, bank loans or financial investment needed to be done with the achievements.
Diagram of the stages of the cash management
11.1.2. Cash budget:
The cash budget is the principle instrument of short-term financial forecast, it establishes for periods varying languages (year, month, week, day), the forecast financial flows and to consider adjustments to fill the gaps or to place surplus cash.
A) We use a cash: the monthly budgetThe cash budget is to describe the estimated receipts and expenditures in order to highlight the differences and anticipate measures to reduce the negative differences (cash deficit) or to make optimum use of any surplus of cash flow.In the absence of this budget and in case of liquidity problems, the company will find it difficult to imagine the fast financial solutions to address them.The budget is a means of prediction and control of the treasury of the company it is the main instrument of short-term financial forecast.DEFINITION OF BUDGET CASH
The cash budget is a statement setting out month by month or even week by week, revenues (receipts) and expenditures (disbursements) forecast of the company, and the timing of its cash needs or available cash .In the budget, a distinction is made between revenue and operating expenses (sales of goods, finished goods, raw material purchases, regulation of wages, etc ...) and non-operating income (sale of capital, repayment of loans, etc ...)Diagram of constriction of a cash budget
I
Operating activities
II
Discontinued OperationsIIII-II-III
Companies are confronted daily with cash flow problems, and emergency cash needs can be satisfied with a theoretical and doctrinal treatment, as we propose to illustrate the mechanics of cash flow through a case.
EXAMPLE OF MONTHLY CASH CONSTRUCTION D4UNThe company "X" has an accounting period which coincides with the calendar year, it wants to establish a monthly cash budget for the first half of year 1 for this purpose, it brought together the accounting document and the following information:
Assets LiabilitiesFixed assetsStockAccounts receivableStateOther receivablesAvailable 460 000120 00098000 (a)22000 (c)5000 (e)15 000Share capital 720 000ReservesDebt financingAccounts payableStateSocial security 300 000200 00090 000 (b)99000 (d)30 000 (f)1000 (g)720 000
IS 30 000 - 19 000 = 11 000a) Regulation 19N in a late January: 28,000
end of February: 35,000
end of March: 35,000b) Loan payable trimestralités 15 000 31/03et the 30/06 and the 31/12 of each year: 12% interest rate.c) It is the VAT on purchases, December 19N, to be deducted on the return to establish under a January 19N to 19N 6195 Surelle February 1 for 7823 and that of March 7982 for a 19N .d) Liabilities vis-à-vis suppliers will be paid according to the following schedule in a 19N:31/01: 49 000 99 00028/02: 50 000
e) Claim on sale of capital adjustable 30/04f) This account shall include the remainder of the company tax and VAT 19,000 to pay for operations of less than 19N in Decemberg) This amount will be adjusted January 1 19N
INFORMATIONIS the interim to be paid an amount of 19N each in 14,291
Weather forecast for the year 1 19NMonth 01 Month Data 03 Month 02 Month 04 Month 05 Month 06Sales skillsPrice H.TPurchases in amountsPrice H.TOther external expenses(V. A. T. non-deductible)Gross monthly wagesPayroll taxes and insurance 1000200-13015 000
15 00023% -20080013015 000
15 00023%2200200120013015 000
15 00023%800200210013015 000
15 00023% -200-13015 000
15 00023% 1700200110013015 000
15 00023%
* The VAT rate is 20% on sales, purchases and services, it is 7% interest on the company on the flow regime.* The condition of the settlement of customers and the following* 10% cash, 30% at 30 days end of month 30% to 60%, month-end and 30% to 90 Month-end* Purchases and external expenses are paid 60 days end of month* Wages are paid at the end of the month and the corresponding payroll next month.* The stock is equal to 30/06 at 65 000* The tax rate is 35%* The annual depreciation amount to 80 000
Elements of the correctedCollection of sales forecastCashing month plus VAT Receivables Total balance sheetWith 10% A 30% A j 30 j 60 j 90 30% A30%JanuaryFebruaryMarchAprilMayJune 240 000-528 000192 000-408 000 24 000-52 800019 200-40 800 -72 000-158 40057 600- --72 000-158 40057 600 ---72 000-158 400 28 00035 00035 000--- 52 000107 000159 800249 600216 000256 800122 400 122 400 57 600122 400 180 000122 400122 400Remaining at 30 - 06 - 19N 1 424 800
Regulations purchasesMonths amounts to 60 j VAT Regulations month-end balance sheet liabilities TotalAgainJanuaryFebruaryMarchAprilMayJuin 99000-124 800187 200327 600-171 600 ----124 800187 200327 60049 00050 000----49 00050 000-124 800187 200327 600Remaining at 30 - 06 - 19N 1 171 6000
Other external expensesMonth 01 Month Data 02 Month 03 Month 04 Month 05 Month 06 Total BalanceDisbursement chargesno wayChargesDisbursement 15000 15000 1500015000 1500015000 1500015000 1500015000 90 000 60 000 30 000
V. A. T. to payMonth 01 Month Data 02 Month 03 Month 04 Month 05 Month 06 Remaining VAT
Value added tax collectedV. A. T. deductible:On purchases and servicesCosts of financial-Credit V. A. T.V. A. T. to payV. A. T. deductibleOn purchases and servicesOf interestRemaining 40 000 to 30/06
6195
11 000
7823
33 805 88 000
7982
7823
32 000
72 195
20,800
31 811 68 000
31,200
20,800
83 20015883 358
16 000
16 000
a) deductible VAT on purchases and services: 22,000 (record) + 135,200 (purchases and services) - VAT deducted on the return from January to June (74,000) = 83,200.b) interest on loans of V. A. T.:90,000 x .12 x 7% = 3/12x 189 (first quarter)75000 x0, 12 = 7% x3/12x 158 (2nd quarter)controlDeductible VAT + VAT on the balance sheet transactions for the period TVAdéduite = balance to 30/0622000 + (135200 + 189 +158) -74189 -83358+ Interest expense purchases.Cash budget
Month 01 Month Data 02 Month 03 Month 04 Month 05 Month 06 Total ControlStarting balance
Operating revenueCollection of sales
Operating ExpensesSettlement of purchases and servicesPayment of wagesRegulation of socialFinancial expensesVAT payable
corporate taxOther external expenses
Non-Operating RevenueCashing disposal of fixed assets
Non-operating expensesDebt MaturityDeviationCumulative gap15 000
52 000
49 00015 0001000
11 000
9000
107 000
50 00015 0003450
33 805
745 +44255
159 800
15 0003450
33 29415 000
17 889167 +75912 +70
249 600
124 80015 0003450
72 195
15 0005000
155 +24+ 95 067
216 000
187 20015 0003450
31 811
15 000
- 36 46158,606
256 800
327 60015 0003450
14 29415 000
17 408-135,95277,34615 000 +
1041200 +
738600 -90 000 -18 250 -
148 811 -47 588 -60 000 -5000 +
35 297 -77 346 -
Cash Budget (cont'd)
Month 01 Month Data 02 Month 03 Month 04 Month 05 Month 06 Total ControlWage SettlementsRules of socialFinancial expensesVAT payableIncome taxOther external expenses
NON-OPERATING INCOME
Cashing disposal of fixed assets
Non-operating expenses
Debt MaturityDeviationDeviation accumulated 15,000
1000
11000
-9000 15000
3450
33805
745 +4255 -4 15000
3450
33294 (a)15000
17889 (b)167 +7570,91215000
3450
72195
15000
5000
155 +24-95 067 15000
3450
31811
15000
-36,461+58 606 15000
3450
1429415000
© 17408-135,952-77,34690000 -
18250 -
148811 -47588 -60000 -
5000 +
35297 -77346 -a) IS 19N balance. 19,000 + 19N IS a first depositb) interest due quarterly 15 000 + VAT: 2889 (90 000 * 0.12 * 3 / 12 * 1.07)c) quarterly maturity: 15,000 + interest TTC: 2408 (75 000 * 0.12 * 3 / 12 * 1.07)
The budget shows a lack of a 31/01/19N in 9200, cash positive and then becomes a deficit (23,291 as of June 1 19N), managers can anticipate the kind of solutions adequate to meet the needs (cash loans, etc.)..
Projected income statements to 30/06
SalesPurchases resold (a)Other external expensesSalaries and benefits (b)Financial expensesDepreciation (d)Profit before tax 1,140,000731 00090 000110 700495040 000163 350a) Purchases 676,000 + change in inventories (120 000-65 000)b) (15 000 * 6 * 1.23) = 110 700c) 90 000 * 12% * 3 / 12 +75 000 * 12% * 3 / 12 = 4 950d) 80 000 / 2 = 40 000Balance to 30/06Assets LiabilitiesFixed assetsStockAccounts receivableState 420 000 (a)65 000424 800 (b)11 946 ©
1,021,746 CapitalReservesProfit before taxDebt financingAccounts payableSocial agenciesStateCash-liability 300 000200 000163 35060 000 (d)201 600 (e)3450 (f)16000 (g)77346 (h)1021746
a) 460,000 - Depreciation 40,000 = 420,000b) see under budget receipts oversalesc) see under budget VAT and IS (83 358 2 installments IS / 14294 * 2)d) 90 000 - 2 trimestralités amortization of 15 000e) see under budget procurement regulations and other external expenses (171 600 + 30 000)f) social organizations on salire June to settle a 19N in July (15,000 * 23%)g) VAT payable: see under budget VAT (16000)h) See cash flow
B) Flexible budget: taking into account the uncertaintyThe cash flow forecast represents receipts and disbursements forecasts that lead to consider solutions for the balance to ensure optimal management of cash (use of financial assistance the least expensive and safest or otherwise profitable investment surpluses).
The cash budget is the culmination of other budgets (sales, purchases other expenses, resources and non-operating expenses, etc. ..). gold, both endogenous factors (productivity change, etc. ..). can disrupt the forecasts. If the company can act on the first, for cons, the latter beyond its control.
So to avoid these hazards, it is possible to adopt the method of flexible budgets and it is to establish budgets vary depending on several assumptions, usually three in number: optimistic (high level), medium (level likely ) or pessimistic (low).
For example, for a given level considered likely, we can construct two budgets: one optimistic, in which the forecast is higher than 15% for example, and the other pessimistic, in which they are lower 15%.
This method allows some flexibility in the estimates and therefore anticipates several possible solutions.
Other methods take into account the uncertainty by using the calculation of probability.Although intellectually appealing, it is difficult to implement.
C) the cash flow by the method of supply-useWe had the opportunity to verify the relation:. = CashRecall that:F. DR = permanent financing - Fixed assetsBFR = Current assets excluding cash - current liabilities excluding cashThe cash flow by the method of supply-use situation is to establish monthly forecasts, determine working capital, the need for working capital and, by difference, the corresponding net cash forecast. Where there are non-operating items, can be determined separately F. And R. O. B.F.R. and operating cash.
The sum of operating cash and give non-operating net cash.Let us illustrate this method with an example, in comparison with the method of collection - disbursement.
For the company "ALPHA", we have the following information:Balance sheet at 31-12-19NAssets LiabilitiesNet fixed assetsStock of goodsAccounts receivableState-deductible VATOther receivablesBank 200 00095 000105 00019 200350027 300450,000 EquityDebt financingAccounts payableStateSocial agenciesOther creditors 190 00080 000120 00020 500650033 000450 000A cash balance sheet items relating to:a) 1 / 3 in January and third in Marchb) January (5600), February (4600), March (8800)c) March (1000)d) Loan payable in equal annual installments on 31/12 each yeare) January (35 000) February (30 000) March (55 000).f) VAT payable in respect of operations in December 19N (10500) IS remainder 19N: 10 000g) in January (6500)h) February (15 000) March (15,000)
Forecast (19N +1):salesJanuary February March dataH.TV. A. T. 200 000400001800003600025000050 000
PurchasesJanuary February March dataH.TV. A. T. 130 000260001600003200015000030 000
Other external expensesJanuary February March dataH.TV. A. T. 80001 14 600 0002 9 800 0001800• February: acquisition of a machine HT 40000V. A. T. 8000• Monthly wages 20 000 DH; payroll 28%• Method of PaymentCustomers 30% cash,70% 30 days end of monthSuppliers 50% cash50% 30 days end of monthOther external expenses cashSuppliers of capital 50% at 30 days end of month• wages are paid in the month and the corresponding payroll next month.• Gross margin = 50% commercialSpecific tax:• Annual deductible depreciation is estimated at 36 000• the rate of I. S is 35%• For the VAT, the company is subject to the flow regime and the rate is 20%• The IS at 19N for the year amounted to 120 000.
THE METHOD OF RECEIPTS - DISBURSEMENTS: MONTHLY BUDGET CASH
BUDGET ENCAISSMENTS SALESJanuary February March Balance balances at 1 31/03/19N Total TTC72 000--7200016800064 800-232 800 -151 20090 000241 200 --210 000210 000 240 000218 000300 000756 000
BUDGET ON PURCHASES DECAISSMENTSJanuary February March Balance balances at 1 31/03/19N Total TTC76 000--78 000 78 00096 000-174 000 -96 00090 000186 000 --90 00090000156000192 000180 000528 000
BUDGET other external expensesJanuary February March Balance balances at 1 31/03/19N Total TTC9600-- -16 800- --10 800 --- 960016 80010 800
BUDGET V. A. T. payable (a)January February March Balance Sheet Data at 1 31/03/19NV. A. T. deductible VAT payableVAT collectionDeductible VATBalance 31/12/19NOn purchasesOf external loadsOn capitalVAT payable 40,00056005600
10 500 36 00023 400480013 0001600400034 400 50 00044 600880029 0002800400012 600 47 800 (b)
5400For the procedures, see Chapter fiscalDeductible VAT, balance of month + VAT deductible on operations of the Month - VAT deducted on tax return = balance input tax:Janvier 19 200 + 25 600-5600 = 41 200Février 41 200 + 42 800-23 400 = 60,600Mars 60 600 + 31 800-44 600 = 47,800
Cash budgetTotal data TTC January February March 31/03/19N a balance ofI RECEIPTSOn salesJanuaryFebruaryMarchOn balance sheet itemsCustomers to 31/12Other receivables 864 500
240 000216 000300 000
105 0003500 107 000-72 000--
35 000- 267 800
168 00064 800-
35 000- 277 200
-151 20090 000
35 0001000
--210 000
-2500II DISBURSEMENTSPurchasesJanuaryFebruaryMarchSuppliers to 31/12Other external expensesCompensation duePayrollSocial agencies to 31/12State to pay VATState remaining ISOther creditors to 31/12Suppliers of capital 952 400
156 000192 000180 000120 00037 20060 00016 800650062 90040 000 ©33 00048000159600
78 000--35 000960020 000-650010 500--- 319 800
78 00096 000-30 00016 80020 0005600-34 400
15 00024000369000
-96 00090 00055 00010 80020 0005600-12 60040 00015 00024 000
--90 000---5600-5400-3000-CASH BALANCES III 52 000 52 000 91 800Cumulated balance 25 300 77 300 169 100 169 100© IS 31/12 balance. 10000 1 st deposit IS 19N +1 (120000 / 4)
Projected income statement in a 31/03/19NSalesPurchases resold (a)Other external expensesStaff costsDepreciation (b)Profit before tax 630 000315,00031,00076,8009000198 200a) PR Sales = 63,000 * (100-50)% = 315,000Closing stock = opening stock + purchases - sales 220,000 PRChange in stocks = 95000 - 220 -125 000 000 =Purchasing inventory change = ± purchases resoldPurchases - 125,000 = 315,000 = 440,000 purchasesb) 36 000 * 3 months
-------------------- = 9000
12 months
Supply balance in a 31/03/19NAssets LiabilitiesFixed assetsStock of goodsAccounts receivableState (b)Other receivables 231 000 (a)220000210000778002500
741,300 EquityProfit before taxDebt financingAccounts payableState to pay VATSocial agenciesOther creditorsLiability cash190 000198 20080 00090 000540056003000169 100741 300
a) + 20000 40000-9000 = 231000
+ a new purchase - depreciationb) input tax (47,800) + the first installment on IS (30 000)
THE METHOD OF EMPLOYMENT - RESOURCES
Income statement monthly forecastJanuary February March dataSalesPurchases resold (a)Other external expensesStaff costsDepreciationProfit before tax 200 000100 000800025 60030006340018000090 00014 00025 600300047400250000125 000900052 600300087 400
Change in stockJanuary February March data
+-= Initial stockPurchasePR Sales (sales * 50%)Ending Inventory 95,000130 000100,000125 000 125 000150 00090,000195 000 195 000150 000125,000220 000
Cash Budget: A method of supply-useData 19N December January February MarchI F.D.RCapital (a)Fixed assets (b) 70 000270 000200 000 136 400333 400197 000 146 800380 800234 000 237 200468 200231 000WCR II (AC-PC)Current assets (excluding cash)StockTrade receivables ©State (s)Other receivablesCurrent liabilities (excluding cash)Accounts payableState (s)Social agenciesOther creditorsSuppliers of fixed assets 42 700222 70095 000105 00019 2003500180 000120 00020 500650033 000- 161 700407 700125 000238 00041 2003500246 000 163 00044 400560033 000- 224 100445 300195 000186 20060 6003500221 200151 000226 0005600180 00024000406300510 300220 000210 00077 8002500104 00090 0005400560013 000-NET CASH III (I-II) 27 300 -25 300 -52 000 -169 100Change in cashCumulative change 52600-52 600 -52 000-104 600 -91 800196,400(A) profit before tax was included in the capital structure is that the tax paid on deposits offset the IS due on this result(B) net fixed assets of the previous period + acquisitions - output-depreciation(C) credit balances from the previous period + receivables transactions for the period (see budget receipts)(D) + VAT deductible interim IS(E) + VAT to pay any remainder of the year 19N
The cash budget based on the method of flow (supply-use) is a highly speaking of the financial provision in the short term, because it combines both elements of cash flow forecast, profit and loss accounts and the forward estimates.
It highlights the different elements that influence the variation of FDR, working capital and thus the cash.It is also possible to study the variation of the projected cash following table constructed on the basis of:* Profit and loss forecast in a 31/03/19N* Comparison between the balance sheet and 31/03/19N 1 31/12/19NNetDepreciation and amortizationCash flowDistribution of dividendsFlowRepayment of loanInvestmentsChange in working capital 198 200 +9000 +20720002072000-40,000167200Assets (excluding cash)Change in stocksChange in accounts receivableChange account status (active)Change in sundry debtors accountCURRENT LIABILITIES (excluding cash)Change in accounts payableChange Account Status (liability)Change in account social agenciesChange in account other creditorsChange in working capital000 +125000 +105600 +581000
- (-30,000)- (-15,100)- (-900)- (-30,000)363,600
III CHANGE IN CASH (I - II) 196 400Appendix tax
Mechanisms for calculating and paying VAT
Companies whose annual turnover exceeds 1 million DH are subject to the reporting of monthly, others are subject to the system of quarterly reporting.
Determination of VAT payable
VAT payable in respect of a period = output tax in respect of the period - VAT deduction (the same period).
VAT paid for goods and services is deductible with a lag of one month. VAT on capital is deductible in the month in which the event giving rise to the deduction arose.
* The eventthere are two regimes: the regime of flow (delivery, which generally coincides with the billing) and regime receipts.
VAT collected (oversales)For the flow regime, the event of VAT (due date) is represented by the invoice. However, payments received are taxable, even in the absence of delivery or billing.Receipts for the regime, the due date coincides with the receipt of full or partial amount of the sale (the VAT is due on the actual receipt).
Deductible VATWhatever the plan, the event is represented by the payment date.
* The calculation of the VAT payableVAT payable for the month = N (VAT collected on sales of the month N) - (input tax on purchases of goods and services of the month N-1) - (VAT deductible on purchase of capital assets of the month N).
* The payment of VATVAT due in respect of a period must be paid before the end of the month following that period.
APPLICATIONA company is subject to the flow regime for VAT and has made the following (VAT rate 20%)January 19N.
Purchases of raw materials paid by check: 50000, VAT = 10 000Purchases of services paid by check: 10 000; VAT = 2000These purchases are made during the month.
Month of FebruarySales HT = 100 000, VAT = 20 000Contents purchases paid by check (cash) HT = 30 000; VAT. 6000
Buying a machine paid in cash HT = 7000; VAT. 1400
VAT to be paid before 31/03/19N for operations in February of 19N:
VAT collected 20 000Deductible VAT 10,000- 2000- 1400VAT payable 6600
Some report on corporate tax and the modalities of payment. The industrial and commercial enterprises operated as companies are subject to corporate tax (IS) on their profits, the going rate is 35%.Companies subject to corporation tax must be paid no later than 31/03, 30/06, 30/09 and 31/12 of each year four equal installments at 25% each of the SI in the previous year. For companies whose fiscal year coincides with the calendar year, the regularization of the IS occurs at the time of the declaration of results (no later than 31/03). If the amount of IS is superior to four advance payments, the company must pay the supplement, in the case (excess of payments on the SI) it will charge four or deposit (s) next (s) on the excess .
APPLICATIONEither the company "X" that closes its accounts on 31/12. for the year N.IS N = 130 000Advance payments in N: 25000 * 4 (ie N-1 IS = 100 000)Regularization IS N: (130 000 - 4 * 25 000) = 30 000 to pay prior to 1 31/03/19NFirst installment to be paid before 1 31/03/19N under 1 year N: 130 000 / 4 = 32 500(Payment of the second, third and fourth installments prior to 30/06, 30/09 and 31/12, or 32 500 each).
11.1.3 Cash and cash on the day "zero"
In the cash budget, forecasts are made in terms of money Flus (weekly, monthly, quarterly and annual). The financier is faced daily with decisions relating to arbitration between the various means of payment (cash, bank transfer, effects, etc.). And between jobs and the allocation of resources to different banks that manage the accounts of the undertaken . therefore, the information available to the financier must be very detailed.
The purpose of the cash on a daily basis is to minimize the cost of short-term financial resources (cash loans) and eventually to optimize the return on idle cash. The constraints that must suffer the financial are numerous: background flux random variety of conditions in bank funding costs and deposit rates, etc..
To achieve this goal, the financier should move towards a "zero cash."
Indeed, traditionally, some consider that a good credit should be reflected in a good liquidity reduced, ie by the ratio:Treasury------------------ 1Short-term debt
This principle is not sound because it goes against the demands of profitability: a bloated cash means u win mark for the company, since funding may be placed either in the short term and report financial products, be invested in profitable projects. By cons, a large cash deficit means the charges incurred significant financial profitability and constitutes a danger to the financial autonomy of the company.One way to improve the pace of inflows and lower the cost of using cash loans is to reduce the funding of transit.Payment by checks of customers in different cities of the Kingdom to lead the company two types of delays:The first is the deadline for the delivery of the check from the client to the company, if done by mail, may require a few days;The second concerns the time required for the payment by the clearing house which is several days (up to five checks out place).
To reduce these delays, the company may appoint a representative to collect checks and to submit to the compensation on the ground in remote towns. The funds deposited in an account are available quickly to the company, which may also apply for transfer to his bank account at head office.In addition, cash management requires the day to make provisions in terms of "value days" taken into account by the bank, which are different from the recording dates of operations, so for example, presented a check on site to the bank to offset the 1 / 01 will be the value date of 3 / 01 (or J +2).
11. The two different short-term loans
The short-term loans relate to funding of the operating cycle. They are generally classified into two categories: funds mobilization receivables and cash loans. There are a multitude, their costs are variable and often high. We will be reviewed in the main short-term loans.
A) The funds mobilizationThe company that sells on credit to its customers receive practice of bills of exchange (drafts) or promissory notes of maturity claims materialize.
Commercial discountIf the company feels needs cash, it may subject to the authorization granted by the bank to raise it the debt matures, it holds about its customers: it is said to discount the effects.By the technique of discounting, the company gives effect to the banker unmatured and thereby transfer the debt to him. In return, it makes available a sum of money corresponding to the nominal effect, net of fees and interest calculated on the period up to maturity. This sum corresponds to some extent to the present value of the claim.The discount credit granted to the company is usually with a cap for the full amount of the effects that the company can expect.For the banker, this type of credit risk is relatively low: the effect corresponding to a commercial transaction with the outcome at maturity (payment by the drawee: the client) will repay the advance money paid by the banker . In addition, the negotiable instrument law protects the recipient of the effect. For the company, it is a technique of credit relatively flexible. Obtaining discount credit can be easy when the reputation and solvency of the "learned" are established.The company have the opportunity to get their client the cash settlement, with a cash discount (x%) should compare the cost of the latter with the discount of commercial paper to the banker.
Application
Assuming that customers of a company can pay bills by 75 days effects or cash, less a discount of 2% and the interest rate applicable to the discount market is 11.5%For an effect of $ 100,000 DH which is the best solution?Cash discount: 00 100 * 2% = 2000; Net = 98 000The company gives up to 2000 have a total of 98 000 for 75 days, corresponding interest rate:2000 360J
X = 9.80%75j 98 000compared to the 11.5% rate applied to bank told the company would not have interest to prefer payment by expected effects
FINANCING OPERATING ACTIVITIES
Exporting companies have specific needs for financing their operations with foreign countries:• Prospecting Market• Operations of manufacturing goods for export: raw materials, manufacturing costs, storage, export, and this often, settlement periods longer or shorter customers.Financing needs arising from the operations of physical production and export may be a short or an advance on goods.
Commercial paper
This is a relatively flexible and simple partial funding of a need for working capital. For short-term needs, the company through a bank may make loans from individuals or other businesses that have excess liquidity.These are the companies that issue the borrowing commercial paper through a bank, which will honor the ticket maturity (80%) if the issuer is in default.
FACTORING FACTORING OR
This technique brings together the company and the factor. It buys the company's receivables for the amount minus a commission representing the remuneration of its services.The factor takes the place of business for the account management "clients."As the company discharges the risk of insolvency, it is normal for this type of loan is more expensive than traditional solutions.
B) The cash loans
Cash loans or short-term loans are well suited for financing operational needs on time and casual.The company does not support the interest for the short-term use of short-term loans. While the release of an average long-term credit would support the business interests, even though it actually would not use these credits.The main forms of cash loans are the easy cash and short.
FACILITY CASHThe overdraft facility is a credit in the short term designed to bridge the gaps between very short collection and disbursement: Some examples of facilities granted last month to pay salaries. In all cases, the use of these credits must be short (some days).The company as the banker should ensure that the overdraft facility does not turn into cash credit permanent and is expected to fund a structural deficit of cash.
OR DISCOVERED THE ADVANCE IN CURRENT ACCOUNTDiscovered the main function to ensure cash flow requirements in the short term is for example the case of a company that wants to enjoy a good opportunity to buy stocks. This sudden need for cash will be offset quickly by the largest cash flow or the absence or reduction of normal disbursements during the following period.In practice, a company that has an overdraft is authorized to debit his account of amounts in excess of the values they are filed.
CREDIT - RELAY SOLDER OR CREDITWhen a company expects significant revenue (sale of an asset capital increase, loan, etc.) it may apply to the bank a bridge loan that allows it to betroth his needs (investment, etc. .. ) until the cash.
FINANCING OPERATING VALUES (STOCK)Companies can also finance their stock by seeking short-term bank credits. As collateral, banks may require collateral on stocks with or without delivery. These cash loans take many forms:• The seasonal creditThey are intended to finance the needs of companies whose business is seasonal (eg agricultural supply canneries during the short harvest periods).
• Advances on goodsIt corresponds to cash advances to cover part of major stock made by companies.Stocks can be pledged in favor of the banker. They are deposited either in a facility (such as general stores), or at the premises of the enterprise.
• Advances on warrantsStocks financed by the bank can also be deposited in the general stores, establishment regulated by Royal Decree. These institutions are responsible for the goods deposited and receive compensation for their care.It is given to the applicant a receipt order conferring the right of ownership and a warrant in order that authorizes the pledge of the stored goods. Both are likely to be endorsed.382in particular, at the time of obtaining the goods ahead of the owner endorses the benefit of the banker as the warrant of goods (pledge).There are several forms of advances on goods adapted to different sectors (cereals, canning, etc ...)
The documentary credit
The development of international trade, the removal of economic operators (importers, exporters) require them to observe safety rules to ensure the successful completion of the transactions.The shipper must produce documents relating to the goods exported:• The commercial invoice in multiple copies.• Documents relating to the shipment (mainly of lading, consignment note or air waybill, etc ...)• Documents showing the characteristics of the goods exported (certificate of origin, note weight and packing, etc.).To set the documentary credit, we can adopt the terms used by the Chamber of Commerce (ICC):• The documentary credits call arrangements, whatever the name or description, under which a bank (issuing) acting at the request and instructions from a client (customer).• Is required to make a payment to a third party (beneficiary) or to the order, or pay or accept bills of exchange (drafts) drawn by the beneficiary.Or• To authorize another bank to effect such payment or to pay, accept or negotiate bills of exchange against presentation of stipulated documents, provided that credit conditions are met.The documentary credit guarantees to the importer, that the documents relating to the shipment arrived safely and comply with its conditions to the exporter that the agreed price will be fixed.However, the importer is not provided on the merchandise is quite consistent with what he ordered.The importer's bank that is committed to pay the supplier may either block the amount of the invoice dan the customer's account or to grant a full or partial credit (provisioning not only in the amount of credit or documentary provisioning part only)
C) The bonds or credits by signature
The issuance of a bank guarantee does not translate into a cash advance, the bank simply lend his signature. This is essentially the case of administrative guarantees required in connection with the procurement and execution of public procurement and customs bond required when importing goods temporarily suspended customs duties.
ADMINISTRATION BONDS
They are three in number:• The deposit draftIt is required of any bidder in a public contract, and is intended to guarantee its moral commitment to fulfill the contract if it would be declared successful.• The security for theIn case of award of the contract, the surety bond replaces the final draft, it is intended to ensure the proper completion of the work certified by the final acceptance by the Administration, the amount of this deposit is generally equal to 33% of the market .• The deposit for performance bondIt is intended to ensure the proper execution of the work and protect the administration against defects or defects.
Customs BondThese are bonds issued by the bank on behalf of the company importing or exporting the benefit of the customs administration and intended either to defer the payment of Customs duties and taxes, or to suspend their fate to the achievement of a condition precedent (for home use, re-export of temporarily imported goods, etc. ..)Some deposits for import transactions, other export operations, some have resulted in deferring the payment of fees, others to avoid payment of duties, the main are:• Guarantees that differ the payment of fees- The credit removalto facilitate the movement of goods in ports, the customs authorities may issue 'passed away' after verification of imported goods, but before the liquidation rights.The benefit of this plan is subject to an application with a bank guarantee for the payment of duties and taxes within 15 to 30 days maximum after the date of removal of goods.- The obligation bondedThe payment of duties and taxes for bonded obligation to the company to defer payment of 30.60 or 120 days with an increase at a rate fixed by decree of the Ministry of Finance.The requirement takes the form of u bonded promissory note, signed by the importer and approved by the bank.- Acquired the bond or deposit in transitgoods entering for example on the national territory in Tangier, while the office of customs clearance is Casablanca, can move between the two cities' bond "provided strict rules set by the administration.This is subject to the production by the importer of a security acquired in transit or deposit.- Bonds to the warehouse (warehouse)This scheme allows the company to import and store suspension of customs duties and taxes, and for a period determined, of goods not intended to be put to use immediately.The warehouse can be public or private, authorized by the customs administration.• Guarantees that allow the two following plans:- The temporaryThe scheme allows exporters to import suspension of customs duties, materials or goods to be processed or to receive further processing before being exported.The amount of duties and taxes is subject to the issuance of a bank guarantee, the release of which is given by the Customs after re-export of goods.- The temporary importationIt applies to goods imported into Morocco and to stay there for some time without undergoing any processing before being exported.For example, it concerns: property (material items) for fairs, exhibitions and conventions, packaging for receiving goods to be exported, vehicles providing international road traffic, etc..
THE FATE OF CAUTION
Where the conditions set by the administration are filled, the company obtained the release of sureties. Otherwise, the company and the deposit (bank) will be required to pay, depending on the situation, rights and duties of the security objects, as well as increase penalties and delay often important.In addition to the reported securities, it is there are other less commonly used.
11.3 The banking conditions and tradingwith the opening of the national economy and the gradual liberalization of trade, monetary authorities have progressively allowed a degree of initiative to the market in setting interest rates.Banks are supporting businesses in addition to the nominal rate, fees and commissions apply to a variety of banking and value dates different from the actual dates. As a result, the nominal rate of credit rarely translates actual rate borne by the company.
11.3.1 The rates, fees, costs and value datesthe interest rate for cash loans common (uncovered overdraft facility) is located at 11.5% at this rate is usually added a commission found as illustrated in the example below:Rate 11.5%Commission found 0.5%11.0%as appropriate, other charges may be added to the interest so calculated.In fact, we shall see that the actual rate borne by the company is different from the nominal rate because of game-day value.Depending on their size and importance of the movements of their bank accounts, companies can negotiate lower interest rates applied by the bank and / or development of value dates.Value dates applied to banking (payment of cash withdrawals by check, etc.) are different registration dates accounting for these transactions.For example, cash paid on the day "J" (trade date) will have the value date "J 1" (or next day. "
Nature of the transaction value Observation DateCash paymentRemoving a species JJ-1 business daysWorking daysPayment of checkOn bodyOn the spotOff-site (HP)
Moves bankable (A)
Moves up non bankableAbroadJ1 +2
12 J15 J20 JDay of surgeryWorking days
Calendar daysCalendar daysCalendar daysHP rebate check discountPlace bankablePlace non-bankable10 J12 JCalendar daysCalendar daysTransferOn the spotOff-siteJJJ aDay of surgeryDebited to the accountCredited to the accountWithdrawal of cash (check or transfers) J-1 business daysDelivery of collection itemsOn the spotOff-site
Place bankable
Place non-bankableJ 5
12 J15 JCalendar days
Calendar daysCalendar days
a) Existence of a clearingSource: Bank Al Maghrib. Regulatory Decision No. 16
11.3.2 The actual cost of creditthe cost of credit due to a combination of the application of nominal interest rate and the count value days.
A) The bank overdraftTo understand the mechanism of day values, we give below an example:
CALCULATION OF AGIOS
Movement of the bank account of the company "X"Value date Debit Credit Balance Days NumbersDay month year Creditor Debtor Accounts Receivable Accounts Payable31080615January 1802030303 NNNNN400150
200 300
400100250
50300
150 826931326002250
650 2400
450
March 31 5500 N 3750
This date differs from the date of registration symmetrical accounting of the company.Interest, which will be added fees amount to:Many debtors * Interest Rate5500 * 11.5%--------------- = 1.7 569 DH360 days
CALCULATION OF THE ACTUAL COST OF DISCOVEREDIn the previous example, the calculation of premiums was made by applying the nominal and based on daily values. In fact, in addition to his regular pay rate (+ commission), the banker makes a profit on the difference in time between the date of the operation (J) and the value date (T +1).
Suppose that the bank gives the company an X discovered the first in January at a rate of 11.5% to meet the deficit, the company pays on the spot checks on January 20, the bank will calculate the interest on 22 days when given payment, the company will have benefited from that found for 20 days. The actual rate will be 11.5% but not:
22 daysX 11.5% = 12.65% ------------
20 days
If we take the case of a company with a turnover amounting to 00 250 000 DH is represented by checks out place (J 12) and found that the rate is 14%, due to the additional days values amounted to:250 000 00 * 0.14 * 12/360 = 1,166,667 J DH, which is not negligible.
B) the actual cost of the discountThe value date for the discount coincides with the day of surgery.Take the example of a company that has an effect of DH 200,000 at maturity of March 31, 1 February, the company expected the effect by its banker credits the bank account the same day. If the company had submitted the bill for collection, the value date was April 5 (J 5).
In the first case, the term of the loan discount is 59 days in the 2nd case (collecting) the downtime of the receivable is 64 days (59 + 5).
If the nominal rate is 11.5% the real rate of discount be apparent to 11.5% * 59/64 = 10.60% is will be advantageous compared to the nominal rate.
SELF-EVALUATION
1. what is the importance of cash in the life of the company?2. what is the way to predict and anticipate cash flow problems?3. that is what a flexible budget?4. What are the elements that explain the difference the nominal rate is the actual rate of cash loans?5. what is the impact of day value on the cost of cash loans?
CAS1 *A company generates annual sales of HT DH 6000000 VAT rate is 20%, 10% of customers pay in cash, 90% are settled by effect 90 days from date to date. What is the amount of discount credit which the company can appeal?CorrectedCA HT = 6000000 DH, 20% VAT, CA TTC = 7200000 DHAverage amount of receivables from customers7.2 million * 90/100 * 90j/360j = 1620000 DHmaximum amount that an engagement with the bank: 1620000 DH
2 *A business overdraft from January 1 to January 18, the date on which it pays to fill up on checks returned by its customers: the rate charged by the bank is 12%. What is the actual rate borne by the company?CorrectedFor the payment of checks, the date of value is equal to J 2, the company is supposed to be open for 18 days (from 01/01 to 18/01), plus 2 days (d "date setting value for the delivery of checks), a total of 20 days found.Therefore, the actual rate of the overdraft is:Real rate = 12% * 20/18 = 13.33%A company gives a discount to both effects following 19N March 28:* Effect of 166,440 DH: May 5 deadline 19N* Effect of 250,000 DH: May 25 deadline 19Nthe discount rate 11.5%, 7% VAT, plus a handling DH effect.Calculate the interest withholding by the bank.
CorrectedEffect of 166 440 DH: duration of 39 days (28/03 to 05/05)Interest 166,440 * 11.5% * 39/360 = 073.56 2 DHHandling fee: 1 DHEffect of 250 000 DH: 59J period (28/03 to 25/05)Interest 250,000 * 11.5% * 59/360 = 711.80 4A handling fee DHAgios (2 073.56 + 4 711.80) 6 785.36 DHDH 2.00 handling fee6 handling fee 787.36 DHHT DH 475.12VAT 7% 7 262.48 DH
4 *to determine the cash flow the first six months of a 19N, the financial manager of the SA "Malta" has the documents is the following information:
Balance sheet at 31/12/19NNet Liabilities Amount AssetsProperty and equipmentFinancial assetsStocks of goodsAccounts receivableState (tax deductible)Other receivablesAccrued assetsBank 250 0007500487 500169,750 (a)36750 (b)25 000 ©850015 0001 million capitalLegal reserveOther reservesDebt financingAccounts payableStateOther creditorsAccrued liabilities 308 00015 000122 000210 000232 50039000 (e)26750 (f)46 7501000000
(A) 30% will be paid January 1 19N, 30% in February and 40% in March(B) corresponds to the cost of purchasing and December 19N deductible in equal shares in February, March and April(C): 20 000 will be paid in February and the remainder in March(D) shall be paid in January (third), February (third), March (third)(E): VAT to be paid late January 17000 balance of the corporate tax to pay the 31/03/19N 1: 22,000 the amount of IS in the financial year amounted to 19N 82 000.(F) will be set as follows: in January 8000, 10,000 in March and the rest in July 1 19N.
The company is subject to the flow regime for VAT, the rate of corporation tax is 35%The provisions established are:
Sales tax (VAT 20%)Data January February March April May JuneHT120000 VAT24000 14000028000 155 000.31000 17000034000 11000022000 18000036000
PurchasesData January February March April May JuneHTVAT 6000012000 7500015000 8200016400 8000016000 9000018000 6200012400
Terms and conditions:* Settlement of clients: 30% cash, 10% and 60% 90J 30j (end of month)* Payment of suppliers: 50% to 60J and 50J to 90J (end of month)personnel costs are estimated at 35 000 DH / month and are paid at the end of the month.Payroll related accounts for 28% of the dirty and are adjusted the following monthThe annual depreciation of capital assets is estimated at 54,000 dirhams. Other external expenses are estimated at:January February March April May June17 850 16 660 21 420 23 800 26 180 15 470It is paid in cashA partner will supply 1 January current account of 50 000. The purchase of a machine is scheduled for April and will be paid in May, took HT = 40,000; VAT = 8000The margin on purchase price represents 40% of sales.You are required to establish the monthly cash budget for the first six months of a 19N. establish the income statement and balance sheet estimates at 1 31/06/19N.
CorrectedCashing projected sales
Month plus VAT Collection Debt Total Balance SheetWith 30% A 10% 30d 60% 90J AJanuaryFebruaryMarchAprilMayJune 144 000168 000186 000204 000132 000216 000 43 20050 40055 80061 20039 60064 800 -14 40016 80018 60020 40013 200 ---86 400100 800111 600 50 92550 9256790094 125115 725140 500166 200160 800189 600AprilMayJuneRemaining 30-06-19N 1 122 40079 200151 200352 800
Disbursement forecast on purchasesMonth plus VAT Collection Debt Total Balance SheetWith 30% A 10% 30d
JanuaryFebruaryMarchAprilMayJuin 7200090 00098 40095 000108 00074 400 --36 00045 00049 20048 000 ---36 00045 00049 200 77 50077 50077 500--- 77 50077 500113 50081 00094 20097 200
Remaining 30-06-19N 1 45 000108 00074 400230 400
Disbursement on the corporate taxData January February March April May JuneRegularization IS-19NFirst installment IS. 19N a2èmeacomptes IS. 19N 1 22 000 (a)20500 (b)
42500
20500 (b)20500(A) of the remaining IS 19N as liabilities(B): 25 SI of 19NVAT on disbursementsJanuary February March April May June VAT ClearanceA deductible paidVAT collectedDeductible VATIncluded in the assetsOn purchasesFixed assetsVAT payable
28 000
17 000 ©28 000
12250 (a)
24000 (d)31 000
12250 (a)
15750 (d) 34,000
12250 (a)6000 (b)
18750 (d)
12 000
13500 (b)800015750 (d)36 000
15700 (b)
500 (d)
54600 (e)
20300 (f)(A) contained active (VAT)(B) VAT on purchases disbursed (36000 * 0.16667 = 6000), 81 000 * 0.16667 = 13,500, 94,200 15,700 * 0.16667 =(C) payable for December 19N(D) To pay for operations of the month preceding(E) VAT stock (36,750) + VAT on purchases of goods services and capital assets (97,800) - VAT deducted on return from January to June (79,950) = 54,600(F) To be paid before 1 31/07/19N for operations for the month of June
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