{"id":4529,"date":"2020-10-13T10:00:32","date_gmt":"2020-10-13T08:00:32","guid":{"rendered":"http:\/\/eneasmagazine.com\/en\/?p=4529"},"modified":"2020-10-13T15:18:07","modified_gmt":"2020-10-13T13:18:07","slug":"your-majesty-the-money","status":"publish","type":"post","link":"https:\/\/eneasmagazine.com\/en\/bussines\/private-equity-en\/your-majesty-the-money\/","title":{"rendered":"Your majesty the money"},"content":{"rendered":"\t\t
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According to the Asociaci\u00f3n Nacional de Entidades de Gesti\u00f3n de Cobro (ANGECO) National Association of Collection Management Entities, about 60% of the European based companies suffer from liquidity problems, while in the case of the Spanish companies that number goes up to 80%.\u00a0These data lead us to write this article, while we also take the opportunity to give some advice that may be useful in treasury management.<\/span><\/em><\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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All entrepreneurs have profitability as main goal in their businesses, but just looking at that indicator alone is not a guarantee that their companies will be in existence over time: it is crucial to look at the company’s treasury management.<\/span><\/p>

Our experience shows that the main issue underlying this discussion comes from the confusion between profits and cash. Companies spend a lot of time analyzing sales and margins, but comparatively little time to analyze when these sales become cash.<\/span><\/p>

Several Spanish and international SMEs have suffered from this lack of understanding, as when they seek to start doing business involving large-scale contracts or to get new \u201ckey clients\u201d they often forego looking at the terms of payment, which sometimes places a lot of strain in the treasury that can ultimately lead to the breach of its obligations. As an illustrative example, a company with just one client paying with a 120 days tenor must have the necessary funds to finance its activities at least during that 4 months period, when it will collect the invoice. Treasury management is one of the main management challenges in the short term and is a relevant support for the decision-making process that will impact the company’s long term sustainability.<\/span><\/p>

Our quick guide to minimize the impacts on treasury of companies include:<\/span><\/p>

  1. Prior analysis of clients and supplier\u2019s terms of payment.<\/span><\/li>
  2. Matching of payments and collections to minimize the existence of overdraft periods.<\/span><\/span><\/li>
  3. Inventory management and delivery schedule not to hold an excessive balance during the production \/ salescycles;<\/span><\/span><\/li>
  4. Use of an adequate volume of treasury to face some exceptional payments without major disruption.<\/span><\/span><\/li>
  5. Planning of annual treasury needs in order to identify the best ways to get resources to finance current activities.<\/span><\/span><\/li><\/ol>

    Managing treasury efficiently is of utmost relevance to allow companies to grow and develop its plans. Financial pressures always have a very negative impact on the management teams both in terms of taking their attention out of key strategic decisions and also by the risk related to loss of key team members who might be tempted to leave for other projects that provide better perspectives and financial stability.<\/span><\/p>

    Much of financial strains can be avoided through proper planning. Use the budget exercise to identify your treasury needs and try whenever possible to manage treasury within 3-6 months in order to anticipate any unforeseen events.<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

    According to the Asociaci\u00f3n Nacional de Entidades de Gesti\u00f3n de Cobro (ANGECO) National Association of Collection Management Entities, about 60% of the European based companies suffer from liquidity problems, while in the case of the Spanish companies that number goes up to 80%.\u00a0These data lead us to write this article, while we also take the […]<\/p>\n","protected":false},"author":13,"featured_media":4418,"comment_status":"closed","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":[],"categories":[471],"tags":[378],"_links":{"self":[{"href":"https:\/\/eneasmagazine.com\/en\/wp-json\/wp\/v2\/posts\/4529"}],"collection":[{"href":"https:\/\/eneasmagazine.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/eneasmagazine.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/eneasmagazine.com\/en\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/eneasmagazine.com\/en\/wp-json\/wp\/v2\/comments?post=4529"}],"version-history":[{"count":5,"href":"https:\/\/eneasmagazine.com\/en\/wp-json\/wp\/v2\/posts\/4529\/revisions"}],"predecessor-version":[{"id":6333,"href":"https:\/\/eneasmagazine.com\/en\/wp-json\/wp\/v2\/posts\/4529\/revisions\/6333"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/eneasmagazine.com\/en\/wp-json\/wp\/v2\/media\/4418"}],"wp:attachment":[{"href":"https:\/\/eneasmagazine.com\/en\/wp-json\/wp\/v2\/media?parent=4529"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/eneasmagazine.com\/en\/wp-json\/wp\/v2\/categories?post=4529"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/eneasmagazine.com\/en\/wp-json\/wp\/v2\/tags?post=4529"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}