The cash gap is .. The coverage of the cash gap

The most common problem of many enterprises is as follows. The company works in its usual mode, delivers orders, bears any costs. The end of the month is coming, you need to pay monthly types of expenses (rent, salary), but there is not enough money. This situation is called a cash gap.

The main problem of enterprises

Cash gap - this is an intermediate lack of funds. When it is time to spend money, and the proceeds that have been planned, no, there is a cash gap. Such a problem can appear in all enterprises of any form of ownership. Its occurrence does not always indicate an illiterate enterprise policy.

Causes of shortage of funds

The lack of necessary funds in the accounts can be formed for various reasons. For example:

• Illiterate organization of the company's finances;
• Delays in payments;
• An unstable situation on the market;
• Export factors.

When the company plans to receive money, it should take into account the timing of these receipts from customers and the timing of their transfers to suppliers. Very often this is a problem. Therefore, such organization of the company's finances is one of the reasons for the lack of funds in the account.

Also the reason for the shortage are unscrupulous buyers who delay payment. A so-called financial hole will be very pronounced if the buyer asks for a deferred payment. The consequences of such a situation can adversely affect the company's sustainability.

There is a so-called temporary cash gap. It can be predicted, in contrast to the permanent gap. To minimize the consequences of such a situation, a certain plan of measures should be developed.

Example of a cash gap

The example of a cash gap is as follows. There is a company that produces bakery products. Once a week, it buys raw materials from suppliers and pays it on the day of delivery, that is, in fact. Sale of finished goods is made with a deferred payment for 5 working days. Let's say that on Monday the goods were delivered to the amount of 1.5 million rubles and on the same day the supply of raw materials for the amount of 1.0 million rubles. Under the terms of the contract, the company must pay upon the supply of raw materials, so it immediately pays the order in full. Remains on the account of the company 500 thousand rubles. On the last day of payment on Friday, the customer receives money in the amount of 400 thousand rubles. On the following Monday, again, the purchase of raw materials for the same amount (1.0 million rubles). But on the account of the company remains 900 thousand rubles. Thus there was a cash gap in the budget in the amount of 100 thousand rubles.

For the company, this threatens the following consequences:

• Penalties for late payment;
• Short supply of raw materials, which is fraught with a violation of production technology;
• The reputation of the company will be in jeopardy.

Forecast for the future

How to calculate the cash gap? Now we'll figure it out.

A cash gap is a problem that can and should be predicted and calculated. To this end, a financial statement of cash flows should be compiled and the types of expenses identified. If at the beginning of a new operational period, a negative value was formed at the factory, then there was a cash gap. Also, the remains of raw materials should be analyzed. If their quantity is sufficient for the next purchase, the situation at the enterprise is quite stable.

There is a formula by which you can calculate a problem such as a cash gap.

Formula

DS + PD-PP = SLM, where:

DS - cash at the beginning of the day;

PD - received payments;

PP - payments to suppliers;

SLM - cash at the end of the day.

If the value of ODS is negative, it is recommended to work with debtors so that their debt can cover a negative value.

Experts recommend making such a calculation every day

Bug fixes

In order to cover the cash gap, it is necessary to compile a daily detailed report on the above formula. It should be clarified which factor is the cause of its occurrence. After that, further decisions can be taken. Below are the possible ways to fight.

Daily work with accounts receivable. Every day, you have to contact customers, communicate, find out the reason for the delay in payment, find common solutions. If it is possible to provide a commodity loan, you should remember about several factors: you need to set adequate limits on loans, sort debts, conduct reconciliations with debtors.

It is necessary to try to apply as little as possible to credit.

Proper compilation of financial statements is important, the correct calculation of cash flows.

How to eliminate the consequences

A cash gap is a situation that causes damage to the enterprise. It is worth thinking about mitigating the consequences for the company. This can be done in the following ways:

• Suspend mandatory payments to the organization - it is better to pay taxes a month later, since the interest will be much lower than the overpayment in the form of interest on a bank loan;
• Invest the owners' funds;
• Use factoring schemes - banks can redeem at a high discount accounts receivable only verified counterparties (this method is more suitable for large organizations);
• Work with counterparties, it is possible that suppliers will be able to delay payment, because they are also interested in this (if the company constantly uses the services of the same organization for a long time, the supplier will meet halfway);
• Get a loan from the bank.

Credit as a way to get rid of the cash gap

One way to mitigate the consequences of a cash gap is to get a loan from a bank. Without sureties, the loan amount may not be sufficient to cover the gap. To get a loan in a large amount, you should follow several rules:

• Apply immediately to several banks. This will get a positive credit history in most financial institutions and distribute the overall need for cash. New customers will have to wait a little, but if they apply again, the loan terms can be revised in favor of the organization.
• When applying to a bank, it is better to apply for an amount larger than the cash gap. In this case, it is more likely that they will provide the required amount of money. In such a situation, a decrease in the cash gap will be accompanied by an increase in the cost of servicing the loan.
• If it is possible to provide property as security, then only one that does not require state registration should be used.
• You should contact the bank in advance. For example, if the old contract ends in a month, then it's time to formalize a new agreement on the same terms. The next month, most of the proceeds will go to repay the loan, and current needs will be closed by a new loan.

This situation can be considered in detail in an example.

The organization received the first loan in July 2016 to the amount of 5 million rubles against the security of the premises. In the terms of the contract, the loan is paid out in two installments: in August and October of the same year, 2.5 million rubles. In October, the organization issued another loan under the same conditions for 5 million rubles. The contract specifies a restriction that the total loan amount should not exceed 5 million rubles. The proceeds in August will go to repay the first loan. All payments to the company will be closed by a second loan. Such a scheme will help to maintain working capital.

Draw conclusions

The cash gap is a shortage of money, which is easier to prevent than to eliminate its consequences. Therefore, the company should conduct a thorough and competent analysis of all financial flows of the organization, constantly contact debtors, try to solve problems together and be on good terms with suppliers. In fact, this is the basic principle of money management.