RESOURCE CONSUMPTION OPTIMIZATION THROUGH MINIMIZATION OF CASH OUTFLOWS
Supp/2008 , p190..197
Author(s):
Petru STEFEA
Andrei Pelin
Keywords:
Cost, expense, cash-flow, optimization, cost control
Abstract:
The Operational net cash-flow is calculated by subtracting cash outflows from cash inflows from operations. The main factor that determines the cash inflows is represented by the value generated by the organization for markets it addresses to. In order to maximize the inflow component of cash-flow it is vital to maintain a continuous and interactive communication with the market and with consumer preferences as well as the projection of their future evolution. The second component of cash-flow – cash outflow – is influenced by the efficiency of resource consumption processes from within the organization, a factor which is much more under organization’s control. The management’s objective regarding general efficiency encompasses reduction of both resource consumption expressions. However, not all measures of cost and expense reduction are durable, i. e. generate a greater positive effect than the effort required to implement them, including unfavorable effects which propagate on other aspects of organization’s activity. The paper aims to explore the possibilities of expense control and reduction from the perspective of their effects upon cash outflows.
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