CASH FLOW MANAGEMENT THROUGH INTERNATIONAL PAYMENT INSTRUMENTS: THE CASE OF A FERTILIZER PRODUCTION COMPANY

Abstract

In the face of international sanctions, suppliers of raw materials to the fertilizer production company began demanding advance payments, leading the company to increase its working capital requirements and resume production only at minimal capacity. Currently, with the fertilizer production company under sanctions, the managers themselves are managing the cash flow of their company, necessitating the need to manage cash flows and find the most suitable way to do so. Engaging in international trade poses the risk that trading partners may refuse to fulfil obligations due to deteriorating financial conditions and unwillingness. The problem of ensuring cash flows arises if payment (in full or in part) is not received or is delayed. For this reason, an innovation has been developed for the fertilizer production company to utilize international payment instruments, which were not relevant prior to the sanctions. A schema consisting of 6 stages has been devised for the fertilizer production company. After completing all these stages, it was decided that using the documentary collection payment instrument would be most beneficial during the buyer's position, as in this case, the company pays for the actual receipt of raw materials, and if they do not meet the agreement terms, payment simply will not be executed. When occupying the seller's position, the fertilizer production company would utilize the factoring payment instrument. During the research, scientific literature is examined to ascertain the importance of cash flow management. The analysis of such literature includes structuring, comparison, classification, and grouping. Induction, deduction, generalization, and modelling methods were used to develop a logical schema for selecting international payment instruments. Methods of analysing information and documents of fertilizer production companies were employed to verify the suitability of the developed schema.