The core purpose of our business is to ensure that our commercial / sales team are able to issue tickets and maximize revenue for our respective organizations. This can only be achieved if they are given the right tools and the administrative inconveniences are removed.
One aspect to this is to ensure that they always have a sufficient balance in their account to allow them to make bookings. Effective financial management requires that the finance team plays a proactive part in working closely with the sales team to know forecasted sales (subject to fluctuations and seasonal demand), and planning that in line with the lead time banks take to process remittances from the travel agency account to flydubai’s account.
The average danger level of minimum balance can be computed as:
(Average Daily Sales x Lead time for Bank Transfer) + Safety level of Balance
The sales team forecasts a sale of USD 500,000 over the next 10 days, and it takes 5 days for funds to reach flydubai. The company decides on always keeping a balance of USD 100,000 as a balance.
The average daily sales is USD 500,000/10 days = USD 50,000 per day
The danger level will be ($50,000 x 5 days) + $100,000 = $350,000.
Once the available balance reaches the threshold of $350,000, the finance team should proactively begin working on the extended forecast and always ensure that the commercial activities are not put at risk.