Cash Management using payment calendar
The effectiveness of cash flows to some extent depends on the organization of operational financial planning, which includes the development of a payment calendar. Payment calendar matches the timing of receipts from the payment date for commitments. It is developed to block the development by month, decade in different ways, but typically includes the following sections:
- Cash flow;
- The excess of revenues over expenditures;
- The excess of expenditure over income;
- Balance at the beginning of the period;
- The balance of the period end.
With payment calendar following tasks:
1) organization of accounting of cash and cash costs at certain intervals;
2) management of solvency;
3) development of measures to prevent deficiency of cash at certain intervals;
4) develop measures for the effective use of temporarily free funds;
5) determine the need for short-term loan volumes at certain intervals;
6) permanent control over the timely flow of funds analysis of the causes deviations from schedules.
Development of payment calendar is based on information covering all aspects of financial activity, namely sales plans, status of settlements with debtors and creditors, graphics, payroll, credit agreements, estimates of costs of production, capital investment plans, agreements and so on.
If the plan period cash flow based balance at beginning of the period would not be sufficient to cover planned expenditures, the company can take a number of measures to prevent violations of terms and conditions of settlements or establishing the fact of insolvency. Such measures include a waiver of costs that are not priorities, postponement of payments under the arrangement, credit, accelerated payments for goods shipped, mobilization of internal resources and so on.
If the company receives an excess of "free" money, it is a testament to its financial stability. In this case it is necessary to develop measures to promote the use of "free" money.
Thus, the payment calendar is an important tool of operational cash management in the enterprise.