‘blood flow’ in humans ‘cash flow’ in companies | Ahmet KARBIYIK


Business owners and creditors also want to see the results of the “financial analysis” before the diagnosis. Business cash (or cash convertible) values ​​and cash flow are critical to the health of businesses… Just as “blood flow” is vital to people, “cash flow” is vital to businesses. companies. Blood circulation problems hamper human health, cash flow problems hamper business activities.


Meanwhile, some misconceptions inherent in diagnosing cash flow problems also make early diagnosis difficult. The biggest mistake is; The misconception that “profitable companies don’t fall into debt repayment difficulties”. Yes; Although businesses are profitable, they can run into serious problems due to a lack of cash and may even go bankrupt. Although a significant amount of profit is visible in the balance sheet and income statement of some companies, the vault can be full. Profitable businesses may have heavy overdue debts. Companies may owe their suppliers, banks, Finance-SGK or employees…


Very well; How can a profitable business fail to pay its debts? No one expects profitable companies to default on debt in the first place. Because it is not necessary to collect money to generate profits in trading documents. Since there is a profit in the price of the product when the sales invoice is issued to the customer, this profit is reflected in the records. But making a profitable sales invoice doesn’t actually put money in the cash register. The profit appears in the balance sheet/income statement, without waiting for the receivable on the invoice issued to the customer to actually enter the company in cash. Profitable sales appear in the books, but this profit is not entered into the business in cash, it is hidden in the (customer’s) balance sheet. will receive from the customer; In fact, it doesn’t make much sense to have a profitable sales invoice unless the money has entered the company’s cashier-bank…


In addition to the customer side, where companies provide cash receipt (collection), there is also a supplier side, the front that requires cash disbursement… If the due date for payments to suppliers is earlier than the due date collections to be made from customers, this will negatively affect the cash flow. The situation worsens if the customer’s receivables cannot be collected (become suspicious) within the (expired) deadlines shown in the registers…


Besides; Inventory rotation, insufficient capital invested by partners and the relative importance of management-marketing-financing expenses can also strain cash flow. However, the first point to be checked in all cases is the balance of deadlines between customer receipts and supplier payments… Companies must therefore not neglect their cash flow by operating only with a logic of profit. Cash flow; It will be healthy when the maturity of receivables (in invoices issued to customers) is managed earlier than the maturity of debts (in invoices issued by suppliers). Finally, the fact that certain debt items (VAT and taxes included in the withholding tax declaration, insurance premiums, salary payments, electricity, water, etc.) cause recurring monthly cash outflows must be taken into account. account separately, independently of other transactions that affect the common treasury.



Since VAT involves both “collection” and “payment” operations, it has a direct impact on businesses’ cash flow. VAT is included in sales invoices issued to the customer, and the VAT is “collected” there upon collection from the customer. Invoices received from the supplier also contain VAT, and when “paying” to the supplier, VAT is included. By comparing the sum of sales invoices issued during the month and invoices for goods/services received from suppliers, either the payment of VAT is made or (if the VAT paid to suppliers is higher than that collected from customers) the transfer of VAT takes place when the end-of-month declaration is issued. If there is a VAT payment, there is no hesitation, the VAT levied on the customer is paid to the government and the cash flow is not affected.


What happens if transfer VAT occurs? This is when cash flow is negatively affected. The fact that the VAT paid to suppliers is higher than the VAT collected from customers actually means lending to the government without interest. Due to the magnitude of the “transfer VAT” burden accumulated in the past, businesses continue to bear the burden in this regard. The VAT charge on transfers is pronounced at one hundred billion lire. Although the accumulated charge cannot be melted immediately; Although there is no cash refund option, the unwarranted “VAT” burden on businesses can be removed by extending it to future maturities, providing the option to offset premium debts. tax assurance and offering the ability to write down expenses.

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