Optimization of cash flows in an industrial enterprise

Cash flow is the amount of money that an organization receives or pays during a reporting or planned period.

Cash flow reflects the movement of cash, which in some cases is not taken into account in calculating profits, as well as depreciation, investment costs, tax payments, fines, penalties, borrowed and advanced funds, etc.

The inflow of funds is carried out through: proceeds from the sale of products, works, services; Increase in the authorized capital from the additional issue of shares; Received loans, loans and funds.

The outflow of funds arises from coverage of current costs, investment costs, and payments to the budget and extra-budgetary funds, payment of dividends to the shareholders of the organization, etc.

Net cash inflow (cash reserve) is formed as the difference between all receipts and deductions of cash.

The content of money turnover can be viewed from the perspective of its essence, types of cash flows, turnover, and structure. In essence, the money turnover is a process of continuous movement of money in cash and non-cash forms, reflecting the patterns of movement of money and goods. Its material basis is commodity circulation. Money turnover is the aggregate of all flows of money flow [1].

Effective cash management increases the degree of financial and operational flexibility of the company, as it leads to:

1. Improving operational management, especially in terms of balancing revenues and spending money;

2. Increase sales and optimize costs through greater maneuverability of the company's resources;

3. Improving the efficiency of debt management and the cost of their services, improving the terms of negotiations with creditors and suppliers;

4. Creation of a reliable basis for evaluating the performance of each of the company's divisions, its financial status as a whole;

5. Increase the liquidity of the company.

The main purpose of cash flow management is to ensure the financial balance of the organization in the process of its development by balancing the volumes of receipt and spending of money resources and their synchronization in time.

The process of managing cash flows of an organization consistently covers the following main stages:

- analysis of the organization's cash flows in the previous period;

- identification and analysis of factors affecting the formation of cash flows;

- selection of directions for optimizing cash flows;

- budgeting of cash flows;

- full, timely and reliable accounting of transactions with cash;

- control (audit) of the legality of settlement transactions and the correctness of their reflection in the accounting;

- analysis of the cash flow of the reporting period;

- determination of the optimal level of cash;

- forecasting of cash flows.

Depending on the type of activity, cash flows for operating, investment and financial activities are distinguished [2].

Operating activities bring the organization the main revenue and the main cash flows. Operational (current) activities are the activities of the organization pursuing profit-making as the main goal, or not having profit-making as such purpose in accordance with the object and purpose of the activity.

So, cash flows from operating activities mainly arise from the main, revenue-generating activities of the organization and are the result of operations and events included in the definition of net profit (loss). Cash flows from operating activities include:

- cash receipts from the sale of goods, products, works, services, repayment of receivables, leases and other income;

- cash payments to suppliers of raw materials, materials and services, staff salaries, taxes and fees to budgets of all levels and extra budgetary funds, interest on loans and borrowings and other payments related to the implementation of the operational process.

Investment activity is the company's activities related to capital investments in connection with the acquisition of fixed assets, intangible assets and other non-current assets, as well as their sale; with the implementation of long-term financial investments in other enterprises, the sale of securities, other financial investments, etc.

Thus, investment activity is the acquisition and sale of long-term assets and financial investments that are not related to cash equivalents.

The financial activities of the company are activities related to the implementation of short-term financial investments, the issuance of shares and other securities, the attraction and repayment of loans, etc. Financial activity leads to changes in the size and structure of own and borrowed capital.

Important for effective financial management in the enterprise is the organization of cash flows taking into account external conditions and features of its economic activities. Thus, one of the most important management tasks under the leadership of an enterprise is the organization of the movement of cash and material flows [3].

On the one hand, it is necessary to maximize the flow of funds per unit of time, on the other; it is most effective to use available funds. In modern conditions with a high level of inflation delays in the receipt of funds lead to their rapid provision, and irrational use - to a fall in the profitability of the enterprise.

To choose the best form of cash flow management and to form a system of accounting-analytical support, it is necessary to consider in detail the factors that affect their volume, intensity, and the character of formation over time.

In the system of external factors, the main role is played by: the conjuncture of the commodity market; Conjuncture of the stock market; Taxation system of the enterprise; The established practice of lending to suppliers and buyers of products; The system for effecting settlement transactions of economic entities; Availability of a financial loan; The possibility of raising funds for free targeted financing.

In the system of internal factors distinguish:

- The life cycle of the enterprise;

- Duration of the operating cycle;

- Seasonality of production and sale of products;

- The urgency of investment programs;

- Amortization policy of the enterprise;

- Operational (operational) leverage;

- Financial mentality of owners and managers of the enterprise.

The advantages of the proposed classification are obvious. This is a clearly traced system of approach, and a clear logic of these characteristics of factors and their impact on cash flows, and the disclosure of the relationship between factors.

Preliminary assessment of the financial position of the enterprise is carried out on the basis of financial statements. Financial reporting - a set of accounting records reflected in the form of certain tables and characterizing the movement of property, liabilities and the financial position of the company for the reporting period. There are four main types of financial statements:

- the balance sheet is one of the components of the financial statements formed by the organization. Elements of accounting information about the financial position of the organization, which are reflected in the balance sheet, are assets, liabilities and capital. The balance sheet should characterize the financial position of the organization as of the reporting date;

- the profit and loss account contains the data on incomes, expenses and financial results in the total amount from the beginning of the year to the reporting date;

- the statement of changes in equity discloses information about the movement of the authorized capital, reserve capital, additional capital, as well as information on changes in the amount of undistributed profit (unprotected loss) of the organization;

- the cash flow statement shows the difference between the inflow and outflow of cash for a certain reporting period. At this stage of the analysis, an initial view of the enterprise's activities is formed, changes in the composition of the enterprise's assets and their sources are revealed, and interrelations between the indicators are established [4].

To this purpose, we determine the ratio of individual items of assets and liabilities of the balance sheet, their specific weight in the total; we calculate the amount of deviation in the structure of the main balance sheet items in comparison with the previous period. At the same time, the total amount of the change in the currency of the balance is broken down into constituent parts, which allows making preliminary conclusions about the nature of the existing shifts in the composition of assets, the sources of their formation and their mutual conditionality. So, in the process of preliminary analysis, changes in the volume of real estate and current or current assets are considered in connection with changes in the obligations of the enterprise.

One of the main methods of financial analysis is vertical analysis.

Vertical analysis is carried out for the purpose of determining and comparing the results of the specific weights of individual balance sheet items, one period to another. At the moment, vertical analysis is one of the most widely spread forms for analyzing the financial performance of any enterprise.

Today almost all companies carry out a vertical analysis. The main essence of vertical analysis is the definition of the structure of the funds of this enterprise and their sources.

Liquidity ratios are financial indicators calculated on the basis of the enterprise's reporting to determine the ability of the company to repay current debt due to available current (current) assets. The meaning of these indicators is the comparison of the amount of the current debts of the enterprise and its working capital, which must ensure the repayment of these debts.

The absolute liquidity ratio shows how much of the short-term liabilities can be repaid at the expense of available cash. The higher this value, the greater the guarantee of debt repayment.

The current liquidity ratio (total coverage ratio) shows the extent to which current assets cover short-term liabilities. A coefficient with a value greater than 2.0 is considered satisfactory.

The main source of the company's cash flow is revenue from sales of products and profits. The absolute value of these indicators, as well as their dynamics over the reporting period, characterizes the efficiency of the enterprise [5].

Revenue from sales is understood as accounting income from ordinary and other activities of the enterprise for the reporting period. Profit is understood as the difference between accounting income and accrued costs associated with the production and marketing of products.

The profit expresses the net income received by the enterprise for the reporting period, and is recognized after the sale of the product, and not at the time of receipt of proceeds from sales. Costs attributed to the cost of production, are also recognized only after its implementation. The amount of profit is subject to manipulation using accounting methods, with the help of which it is possible to overestimate or lower the profit indicator of the reporting period.

For these reasons, the profit reflects only the increment of the advanced value, which characterizes the efficiency of the enterprise management, but does not reflect the actual availability of funds available for expenditure

At the same time, the company needs not only to have free cash to pay off current liabilities, but also to keep records of their real income and expenditure. Free cash is the most limited resource, especially in a transition economy, and the financial condition of an enterprise largely depends on their availability in sufficient volume and effective use. The analysis of cash flows based on the cash flow statement is conducted in a straightforward manner and includes a vertical, horizontal analysis of the net cash flow from current, investment and financial activities.

One of the main problems facing any business is the proper planning of cash flows. Forecasting and planning of cash flows is a less studied problem in financial science, which is closely connected both with strategic planning of enterprise development in the future and with the implementation of long-term financial planning.

The plan of receipt and spending of funds is developed for the coming year in a monthly section in order to ensure that the seasonal fluctuations of the company's cash flows are taken into account. It is compiled for individual types of economic activity and for the enterprise as a whole. Given that a number of the initial prerequisites for the development of this plan are poorly predictable, it is usually drawn up in variants - "optimistic", "realistic" and "pessimistic". In addition, the development of this plan has a multivariate nature and the methods used to calculate its individual indicators.

The main purpose of developing a plan for the receipt and expenditure of funds is to forecast the gross and net cash flows of the enterprise in time in terms of certain types of its economic activities and ensure constant solvency at all stages of the planning period.

The plan of receipt and spending of funds is developed at the enterprise in such a sequence.

Forecasting the receipt and expenditure of cash on the operating activities of the enterprise is carried out in two main ways:

- based on the planned volume of sales;

- based on the planned target amount of net profit [6].

When forecasting the receipt and expenditure of cash on the operating activities of an enterprise based on the planned volume of product sales, the calculation of individual plan indicators is carried out in this sequence.

Forecasting the receipt and expenditure of cash on the investment activity of the enterprise is carried out by the direct account method. The bases for the implementation of these calculations are:

- a real investment program that characterizes the volume of investment of funds in the context of certain investment projects being implemented or planned for implementation;

- the portfolio of long-term financial investments projected to the formation;

- estimated amount of cash inflow from the sale of fixed assets and intangible assets. The basis for this calculation should be the plan for their renovation;

- projected size of investment profit (only for long-term financial investments - dividends and interest receivable).

Forecasting the receipt and expenditure of funds for financial activities is carried out using the direct account method based on the enterprise's need for external financing, determined by its individual elements. The bases for the implementation of these calculations are:

- the planned volume of additional issue of own shares or attraction of additional share capital. The cash flow plan includes only that part of the additional issue of shares that can be realized in a specific future period;

- the planned volume of attracting long-term and short-term financial loans, and loans in all their forms (attraction and servicing of commodity credit, as well as short-term internal accounts payable is reflected in cash flows on operating activities);

- the amount of expected receipt of funds by way of gratuitous dedicated financing. These indicators are included in the plan on the basis of the approved state budget or corresponding budgets of other state and non-state bodies (funds, associations and the like);

- the amount of the main debt for the payment in the planned period for long-term and short-term financial loans, and loans. Calculation of these indicators is carried out on the basis of specific contracts of the enterprise with banks or other financial.

The results of the calculation of the receipt and expenditure of funds for the main types of activities and for the enterprise as a whole are made in the form of a planned table, which is summarized in the context of the positions specified in the standard for the statement of cash flows of the enterprise for operating, investment and financial activities and broken down by months, Quarters and for the coming year as a whole.

The forecast of cash flows is to determine the possible sources of income and directions for spending money. Proceeding from the fact that most of the indicators are difficult to forecast with great accuracy, cash flow planning is reduced to drawing up a budget for cash in the forecast period, taking into account only the most important flow parameters: sales volume, sales revenue for cash, and forecast of accounts payable. The forecast is carried out for a certain period:

- for half a year,

- year by quarter;

- for the quarter,

- broken down by month;

- for a month with breakdown by decade [7].

A more detailed calculation assumes the classification of accounts receivable by maturity, which can be performed by accumulating statistical data on analysis of repayment of receivables for previous quarters. At the first stage, the average share of debtors with a maturity of up to 30 days, up to 0 days, up to 90 days is established.

In the presence of other receipts of funds (from other sales, financial transactions), their forecasted valuation is performed by the direct account method: the amount received is added to the volume of cash receipts from the sale of products for a certain period.

In the second stage, outflow of funds is established. Its main component is the repayment of short-term accounts payable. It is assumed that the enterprise pays the accounts of suppliers in a timely manner, although it may delay payment. Deferred accounts payable act as an additional source of short-term financing. Other ways of spending money include staff pay, overheads, taxes, capital investments, interest, and dividends.

In the third stage, the net cash flow (positive or negative balance) is determined by comparing projected cash receipts and payments.

At the last stage, there is a general need for short-term financing (in a bank loan).

The economic activity of any enterprise is inextricably linked with the movement of money. Monetary funds serve almost all aspects of the operating, investment and financial activities of the enterprise. The continuous process of cash flow over time is a cash flow that is figuratively compared to a system of "financial circulation" that ensures the viability of the organization.

The relevance of the topic is due to the fact that the results of the enterprise's core (operating) activity, the degree of its financial stability and solvency, the competitive advantages necessary for current and future development depend on the completeness and timeliness of the supply, production and marketing of products. Therefore, knowledge and ability to use modern methods of analyzing cash flows and ensuring their effective management, guarantee the success of any enterprise.

REFERENCES

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3. Finansovy i ekonomichesky slovar [Financial and Economic Dictionary], comp. S.A. Svyatov, A.E. Lomeiko, V.M. Utyish; under the scientific editorship of Prof. A.A. Abishev. - Almaty: Ekonomika, 2013. - 703 p.

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