2.2. Forecasting and optimization of monetary cash

This section of work of the financial manager is consolidated to calculation of possible sources and outflow of money. The same scheme, as in the analysis of cash flow is used, only for simplicity some indicators can be aggregated.

As it is rather difficult to predict the majority of indicators with a big accuracy, forecasting of a cash flow is frequent reduce to creation of budgets of money in the planned period, considering only the main components of a stream: realization volume, revenue share in cash, forecast of accounts payable, etc. The forecast is carried out for some period in a section of sub periods: year on quarters, year on months, quarter on months etc.

Anyway procedures of a technique of forecasting are carried out in the following sequence: forecasting of monetary receipts on sub periods; forecasting of outflow of money on sub periods, calculation of a pure cash flow (surplus/shortcoming) on sub periods; definition of cumulative need for short-term financing in a section of sub periods.

The sense of the first stage consists in calculating the volume of possible monetary receipts. A certain complexity in similar calculation can arise in case the enterprise applies a technique of definition of revenue from a measure of shipment of goods. The main source of receipt of money is realization of goods which is subdivided into sale of goods in cash and on credit. In practice the majority of the enterprises traces the average period of time which is required to buyers to pay bills. Proceeding from it, it is possible to calculate, what part of revenue for the realized production will arrive in the same sub period, and what in the following. Further by means of a balance method in the chain way count monetary receipts and change of receivables. The basic balance equation has an appearance:

Rb + SP = Re + MR,

where:

Rb- receivables for goods and services for the beginning of a sub period,

Re - receivables for goods and services for the end of a sub period;

SP - sales proceeds during the sub period;

MR - monetary receipts in this sub period.

More exact calculation assumes classification of receivables by terms of its repayment. Such classification can be executed by accumulation of statistics and the analysis of actual data about repayment of receivables for the previous periods. The analysis is recommended to be done on months. Thus, it is possible to establish an average share of receivables with a repayment period respectively to 30 days, till 60 days, till 90 days, etc. In the presence of other essential sources of money (*other realization, non-operating operations) their projection is carried out by method of the direct account; the received sum is added to the sum of monetary receipts from realization for this sub period.

At the second stage outflow of money pays off. Its basic component is repayment of accounts payable. It is considered that the enterprise pays the bills in time though somewhat it can delay payment. Process of a delay of payment is called "extension" of accounts payable; the delayed accounts payable, in this case acts as an additional source of short-term financing. In the countries with the developed market economy there are various systems of payment of goods, in particular, the amount of payment is differentiated depending on the period during which payment is made. When using similar system the delayed accounts payable becomes quite expensive source of financing as the part of the discount provided by the supplier is lost. The salary of the personnel, administrative and other constants and variable expenses, and also capital investments, payments of taxes, percent, dividends belong to other directions of use of money.

The third stage is logical continuation two previous: by comparison of the predicted monetary receipts and payments the pure cash flow pays off.

At the fourth stage the cumulative need for short-term financing pays off. The sense of a stage consists in determination of the size of the short-term bank loan on every sub period, necessary for providing the predicted cash flow. At calculation it is recommended to take into account a desirable minimum of money on the settlement account which is expedient for having as an insurance stock, and also for the possible not predicted in advance favorable investments. We will consider a forecasting technique on an example.

Example

There are following data on the enterprise.

1. On average 80% of production realize the enterprise on credit, and 20% - in cash. As a rule, the enterprise grants to the contractors the 30-day loan on favorable terms (for simplicity of calculations we neglect the privilege size in this example). The statistics shows that 70% of payments are paid by contractors in time, t. with, within the month provided for payment, other 30% are paid within the next month.

2. Realization volume for the III quarter of the current year will make (million rubles): July - 35; August - 37; September - 42. The volume of the realized production in May is equal 30 million, in June - 32 million rubles. It is required to make the budget of money for the III quarter. Calculation is carried out by the technique given above and can be issued in the form of the following sequence of analytical tables (tab. 2.1, 2.1,2.3).