Cash turnover is Definition, essence, principles and structure

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:53

Money and its purpose from early childhood are familiar to a person in any part of the world. Money is what people get for their work, and what they pay for, acquiring for themselves everything that is necessary for life. Hence the concept of cash turnover, which depends on the total mass of goods and services in the country, the price level and other economic indicators.

Amount of all payments

In the economy of any country, a huge number of banknotes, coins, checks, bills of exchange constantly rotates, people pay with bank cards and other payment instruments. Each payment method has its own characteristics and globally depends on the characteristics and characteristics of the country's economy. In the modern world, the turnover of cash is often significantly less in volume than non-cash methods.

The right to issue (print) paper money and mint coins have only treasuries or federal agenciesstates. The sum of all transactions made with their help is the cash turnover. This is:

Payments of remuneration for work, pensions, social benefits, material assistance, interest.
Issuance of savings, loans, interest to depositors and clients of banks.
Public savings in banks.
Paying taxes.
Payment for utilities, transport and other services.
The accumulation of savings by the population.

In another way, we can say that cash circulation is a constant circulation of money between banks, organizations and the population in different directions. In other words, these are all payments that are made in the form of mutual settlements in money for a certain period of time.

And although this is not the largest part of the turnover, its component is significant in the country's economy. Usually its share is no more than 10 percent of all mutual payments

Scientific economists note that the share of cash turnover significantly affects the value of the national currency.

Cash turnover in Russia and its share

In recent years, the amount of cash in our country has grown significantly. How much? Experts say about 40 percent of the cash turnover, this is in the structure of the total money turnover. Such an increase in cash turnover at the present stage of the country's development is associated with the economic crisis of recent years, the growth of mutual non-payments, as well as the desire to evade taxes. In addition, credit institutions poorly controlcompliance with the norms of circulation of cash.

Any mutual settlements on bank accounts make them transparent and allow you to objectively see the processes taking place in the economy.

Current features of cash flow

Features of cash turnover are that it is difficult to take into account and predict as accurately as possible. In addition, a considerable amount of foreign currency is in circulation. Dollarization is one of the features of our current economic situation. Frequent fluctuations in the value of the ruble motivate many to save savings in the currencies of other countries.

Forecasting the required amount of cash and detailing the procedure for its circulation is entrusted in Russia to the Central Bank.

Regulation

Documents of the Central Bank, which describe in detail the principles of cash circulation in the country, are mandatory for all (regardless of ownership and organization of legal entities) rules for organizing the circulation of cash throughout the country.

The essence of the documents is reduced to the general and mandatory for all principles of cash flow management:

All legal entities are obliged to hand over the proceeds and keep money in bank accounts.
If necessary, they can receive cash where they are constantly served.
Everyone has a limit on the balance of money at the box office.
Exceeding the established amount is not allowed, except in cases where the balance is intended for wages.
Moneycash flow is centrally controlled, which allows it to be predicted and regulated.

Structure of cash flow

The Central Bank in Russia is the only emission center. Therefore, the entire circulation of money is concentrated there. The structure of cash turnover looks like this in general terms:

From the cash settlement centers (Reserve Fund) of the Central Bank of the country, cash is sent to the cash desks.
Of them - to the operating cash desks of banks.
From here, businesses, organizations and the public receive cash.
From the cash desks of legal entities, the population is paid money as remuneration for work, as well as various allowances and scholarships. It is extremely rare for legal entities to pay cash between themselves.
In turn, citizens pay money for goods and services to the cash desks of economic entities, and payments for taxes and other services to the cash desks of commercial banks.
Enterprises and other organizations donate their proceeds, cash balances (subject to the limit set by them) to the cash desks of commercial banks.
The operating cash desks of commercial banks also have limits on cash balances, which they are required to hand over to cash settlement centers in cases of their excess.
And RCCs donate surpluses to reserve funds.

This is how the circulation of money in the state happens. This is the essence of the cash turnover of the national economy.

Planning

In order to balance and optimize the amount of money supply in the state, the Central Bank draws up a predictive cash turnover plan on a regular basis. Such a financial forecast is a tool for calculating the amount of money needed in circulation and, if necessary, its emission.

The forecast is a calculation based on the amount of cash receipts from legal entities and the population (revenues, deposits, loan repayments, payments, etc.) to banks on the one hand. On the other hand, banks collect data on the estimated need for money to pay salaries, pensions, allowances, scholarships, loans.

Turnover Analysis

Forecast data, as well as actual cash flow figures, is also an important tool for understanding and analyzing the state of the country's economy, income, and the amount of savings that the population makes. In addition, in special moments of crisis, such an analysis gives an understanding of the amount of hidden income. And about the shadow turnover of money, tax evasion.

Quarterly the Central Bank analyzes:

how fast money circulates;
how the consumer price index fluctuates;
how fully the possibilities of cashless payments are used (between legal entities and individuals);
collection, cash discipline, targeted and non-targeted use of cash by legal entities;
debt (its value and reasons) to the population for wages and other payments.

For Government analysiscash flow is a serious help for making a variety of decisions.

Also, planning and analysis allow you to make a timely decision on the need for an issue.

Issue

A large share of circulation in the form of cash circulation affects the costs of its provision. These are the costs of storage, transportation of money, their collection, document flow, replacement of worn-out banknotes. As well as inflationary costs to increase the amount of money - emissions.

During periods of economic growth, according to the monetary rule, the mass of rotating funds should increase each year approximately in proportion to the growth of the gross product.

Emission may also be required in such periods when money remains with people and settles in the form of savings (not in bank accounts), not participating in the circulation. Thus, there is a shortage of cash.

Since the forecast of cash turnover is compiled by banks and cash settlement centers quarterly and yearly, it is actually operational. In cases where it is expected that cash outflows from all cash levels will exceed receipts, the Central Bank plans to issue money.

The importance of cash flow for the country's economy and the role of the state

In fact, it is the cash turnover that characterizes to a large extent the important indicators of the success of the economy of any country. After all, it is in this area that the chain ends: production - sale of goods and services. Cash turnover reflects the levelconsumption in the country and the purchasing power of the population.

The rate of cash turnover is one of the most sensitive indicators of the success of economic growth, business activity, the attractiveness of the country for investors, and many other economic and financial nuances.

State regulation and control over money circulation is an important tool in a market economy. It allows the Central Bank of Russia, like any other state, to regulate discount rates, determine the cost of attracted loans, timely issue the money supply or withdraw it to reserve funds, and keep the country's economy in balance. Such regulation of money circulation (including cash as an important part of it) allows you to influence market conditions, maintain stability and balance in all spheres of the country's life.