Cash breaks are ... How to calculate a cash gap

Cash flow planning can effectively allocate a budget. But in practice, there is often a shortage of funds due to uneven income and violation of payment deadlines. So there are cash gaps. This, as a rule, is an unavoidable problem in any enterprise. But a well-coordinated payment control system will help with it.

The Essence

Cash gap (in English cash gap) is a temporary shortage of funds. It occurs when there is a need to spend money, but there is no planned income. Problems with cash can arise in organizations of all forms of ownership. The concept of "cash gap" should not be confused with "budget surplus". In the first case, it is a question of uneven receipt of funds, and in the second case, the excess of income over expenditure.

Prerequisites

Cash breaks - this is a common phenomenon in enterprises. The reasons for its appearance can be:

• Replenishment of resources due to short-term bank loans;
• Uneven costs;
• Provision of commodity credit;
• Sale of goods at a discount;
• Quick sale of assets.

Prevention

In order to control cash flows, budgets of cash flow (BDDS) and income, expenses (BDR) are drawn up at enterprises. Based on these documents, the "Payment Calendar" is formed, which indicates who, how much and when to transfer money.

Another way to regulate cash gaps is to monitor accounts receivable. You can try to stimulate counterparties to return funds faster, giving them, for example, bonuses for future purchases.

Granting a commodity loan, the enterprise must:

• Keep records of settlements with debtors;
• To rank debts;
• Establish correct limits on loans;
• To carry out claims work on overdue amounts.

But it is worth remembering that even if the company maintains a clear system of cash control , this does not mean that it will not have cash problems.

Short-term loans

For a temporary solution to the problem, you can try to negotiate with suppliers about the deferred payment. Counterparties are most often interested in continuing cooperation with regular customers. Having received financial assistance once, the enterprise is unlikely to change the supplier.

The cash gap at the enterprise can be corrected by factoring. Banks redeem accounts receivable only of proven customers and with a large discount (up to 25%). This measure is more suitable for large enterprises that need several sources of financing.

To finance a cash gap, you can get an overdraft or a loan in a bank. If the time between expenses and receipt of cash on the account will be just a few hours, then it is better to use the overdraft. To receive it you need to provide a deposit. The process of issuing papers will take much less time. The limit usually does not exceed 50% of the amount of revenue for the past month.

Loans

Also, to finance cash flows, you can get a normal loan from a bank. But without a guarantee, the amount can be very small. To get a loan in the right size and in advance, you should follow simple rules:

• Applications for loans should be submitted simultaneously to several banks. So, you can, firstly, distribute the general need for borrowed funds, and secondly, to earn a positive credit history in several institutions at once. Beginners have to wait longer, but with repeated treatment terms and conditions of service can be revised in favor of the client.
• Cash gaps are a lack of cash to finance current needs. Therefore, it is better not to apply for a loan for a large (10-15%) amount. Only in this case is it possible to get the required amount of cash. The reduction in the cash gap in this case will be accompanied by an increase in the costs of securing the loan (valuation of commodity stocks, property insurance, etc.) and payment of the unused limit (1% of the amount).
• If possible, as a security to provide property that does not require state registration, that is, anything but real estate. If the OS is used in this capacity, you should try to access the funds before registering the mortgage agreement. Some banks make such concessions.
• Handle the new application in advance. For example, a month before the end of the old contract to make out a new one under the same security. The next month, most of the proceeds go to repay the loan, and all current needs are financed by a new loan.

Example

The enterprise received the first loan in August 2015 in the amount of 10 million rubles. On bail premises. The contract provides for two payments - in August and September of the same year - to 5 million rubles. If it is a credit line, then the amount can be returned within a month in installments. The main thing is to keep within a month's time.

In September the enterprise concluded another contract for the same 10 million rubles. Under repeated pledge of premises. But the document stipulates that the total debt for both contracts in August should not exceed 10 million rubles.

As a result, there are 2 contracts for the same amount, but with different terms. The revenue received in August (5 million rubles.) Is sent to the full (in September) repayment of the first loan. All current payments are made at the expense of a new loan. Such a scheme ensures the safety of working capital.

How to calculate a cash gap?

For an example of calculation, let's take an enterprise engaged in the production of dairy products. Purchases are made on Mondays with payment of the goods day in day. Sale is carried out on a deferred payment basis for 5 days. Cash gap occurs in the event of a violation of the payment deadlines by the debtors. On Monday it was shipped goods worth 1 million rubles. And at the same time milk was purchased for 0.5 million rubles. After paying the raw materials on the account, the company left 0.1 million rubles. For the first 5 days the debtor paid only 200 thousand. There is nothing to pay for the supply next week. There is a shortage of cash in the amount of 300 thousand.

Such a simple calculation of the cash gap is possible only in small enterprises. In other cases, you should use the formula:

ДС + П - О = ОДС, where:

• ODS is the balance of cash for the day;
• DS - account balance at the beginning of the day;
• P - receipt of money;
• About - payment of the current day.

Cash breaks are a negative value of SLM. In addition, it is necessary to analyze the remaining stocks. Perhaps, there will be no need for new purchases.

Tax will wait

Cash breaks hit the reputation of the company, spoil the credit history, impede the work. Particularly difficult situations are when you have to choose between payments to the budget and counterparties. Some companies began to apply a simple algorithm.

When submitting a tax return to the fiscal authorities, it is necessary to transfer funds to the budget on the same day or a little earlier (VAT, NPP, single tax). But no one is in a hurry to issue a payment order. On the "hung" payment is charged penalties. But sometimes it is more advantageous to pay a fine to the budget than to cover the cash gap with another loan.

Example

Ltd. calculated the advance payment for the second quarter of the NPP in the amount of 1 million rubles. The company also must transfer to the supplier 04.08 rubles 0.9 million rubles. At the end of August, the organization plans to receive payment from the debtor in the amount of 3 million rubles. At 28.07 on the account there are 1 million. We will calculate the cash gap: 1 + 0 - (1 + 0.9) = - 0.9 million rubles. Let's consider two ways of financing the enterprise.

Option 1

1. 28.07 the enterprise submits the tax return and transfers money in the amount of 1 million rubles.
2. 31.07 the company takes a loan of 1 million rubles. Under 20% for 1 month; Due to these funds she pays the debt to the counterparty - 0.9 million rubles.
3. 20.08 there is a payment from the debtor in the amount of 3 million rubles. LLC returns borrowed funds and interest.

We calculate the overpayment: 20% / 12 = 1.67%.

The amount to be returned: 1000 + 1000 x 1.67% = 1016.7 thousand rubles.

That is, overpayment is 16.7 thousand rubles.

Option 2

1. 28.07 the company submits a declaration, but does not return any money.
2. 03.08 LLC repays the debt to the supplier for the amount of 0.9 million rubles.
3. 20.08 receives 3 million rubles. From the debtor.
4. 21.08 the company transfers to the budget an advance in the amount of 1 million rubles. And accrued interest.

Calculation:

The number of days overdue is 24. The refinancing rate is 11%.

The amount of penalty: (1000 x 24 x 11%) / 300 = 8,8 thousand rubles.

Conclusion: the company is profitable to withhold advance payment for the tax. Then the savings will be 7.9 thousand rubles.