Each enterprise uses the main andworking capital. The latter, for its functional purpose, is divided into circulation funds and circulating production assets. The circulation funds include the following elements:
- Commodity products in warehouses;
- shipped commodity products (goods in transit);
- financial resources that are in settlements with consumers of marketable products.
Often, circulation funds that are in the form of money, take different forms:
- financial instruments (they may be on accounts in banking or other credit institutions, in issued letters of credit or securities);
- funds that are directly on hand or in settlements with counterparties.
For maximum operational management of cash, the time of their circulation and the size of the optimal volume are determined, cash flows are analyzed and forecasted.
Funds circulation in the form of goods in transit are divided into groups:
- goods for which the payment deadline has not yet come;
- products for which the payment period is already overdue;
- goods stored by the buyer organization.
The circulation funds represented in the form of receivables consist of arrears:
- suppliers who have expired payment terms;
- all accountable persons;
- Tax authorities (when there was an overpayment of taxes, mandatory payments, which are paid to the budget in the form of advance payment);
- Debtors on disputable debts and claims.
Any receivables are inevitablediverting funds from the turnover, therefore, the effectiveness of their use is reduced, which can lead the enterprise to a difficult financial condition. Its level is directly related to the settlement system adopted by the organization, the range of products and the state of saturation of the market with similar products. Its specific weight in the entire structure of circulation funds is often quite large, and therefore requires a strict, constant control. Management of this debt provides for the control of the responsible financial services of the organization at the speed of turnover of such funds in the relevant calculations.
Since funds of circulation are means,invested in stocks of finished commodity products; already shipped, but unpaid goods; funds in settlements with debtors, they are closely related to the process of circulation of goods. These funds do not participate in the formation of the value of goods, but are its direct carriers. All movements of current assets constitute a continuous unified process. At the end of the production cycle, after the production of marketable products, as well as its sale, the entire value of these funds is reimbursed in the form of proceeds from the sale of products (services, works).
The funds of circulation are in uninterruptedmovement, so ensure the circulation of funds. At the same time, there is a constant change in the forms of value: thus the money form becomes commodity, then industrial, and again commodity and money.
The monetary stage of the circulation funds becomesthe form of industrial reserves, then in the production stage the reserves turn into finished products, after the realization (the commodity stage) of the products, it acquires a monetary form. All funds advanced to the form of production reserves are returned, and part of the savings, which exceeds the cost of goods sold, is the profit of the enterprise.
The effectiveness of the use of circulation funds depends on their turnover speed. The main indicators include the duration of turnover, turnover and load factor.