The first component of a cash management procedure manual is the statement of cash management objectives. This section defines the purpose, scope, and goals of cash management for the business. It also identifies the roles and responsibilities of the cash management team and the reporting and communication channels. The cash management objectives should align with the overall business strategy and financial plan and reflect the cash needs and risks of the business.
Effective cash management isn't just about preserving liquidity, it's about optimizing your financial resources to fuel growth. When you align your cash management objectives with your business strategy, you create a powerful synergy that propels your company towards its goals. Remember, it's not just about holding onto cash, it's also about strategically deploying the ash to make every dollar work for your success.
le principe de gestion de la trésorerie part principalement d'un budget prévisionnel qui comporte plusieurs points importants "CA, les achats, CAPEX, consommables, frais financiers, impôts....) a partir de là, le gestionnaire pourra rapprocher entre le réalisé et le prévisionnel et ajuster fur et mesure la situation mensuelle.
Cash management is an essential function for any business, and having a well-defined cash management procedure manual is critical for ensuring that the organisation has a strong financial foundation. A well-defined cash management procedure manual is essential for any organisation that wants to maintain a strong financial foundation. By including the key components outlined above, businesses can ensure that they have the tools and procedures in place to manage cash effectively, prevent fraud, and comply with relevant laws and regulations.
La gestion de la trésorerie est indispensable pour toutes les entreprises. Gérer efficacement sa trésorerie implique de surveiller les entrées et les sorties d'argent, ainsi que d'analyser divers indicateurs pour déterminer la meilleure stratégie à adopter (emprunts, investissements, financement...). Il est primordial de se concentrer sur l'obtention de ressources financières adéquates pour favoriser ou stimuler la croissance de l'entreprise.
Cash is regarded as the blood of the business Effective cash management is required to 1) running the day to day business without any interruption 2) Managing the liquidity in favor of the dynamics of the business 3) Cash position plays an important role in the M&A activities 4) Cash position helps to increase the stock price by exercising the but back option and thus regulating the market demand 5) Effective cash management also optimises the cost of the capital There are examples where a company is ruined becos of worst cash management despite their successful business model
The second component of a cash management procedure manual is the cash flow forecasting. This section describes the methods, tools, and sources of data used to estimate the inflows and outflows of cash for a given period. It also specifies the frequency, accuracy, and horizon of cash flow forecasting and the procedures for updating and revising the forecasts. Cash flow forecasting is crucial for planning and managing cash balances, identifying cash gaps and surpluses, and optimizing cash allocation and investment decisions.
Cash flow forecasting is quite critical to every organization. More importantly if used to proactively address the cash gaps from sales to collections and from purchases to payments. And optimizing the use of cash surpluses in managing loans or investments.
Cash flow forecasting is crucial for businesses to anticipate future cash movements accurately. For example, in the banking sector, cash flow forecasting is essential for managing ATM cash utilization effectively. By analyzing historical withdrawal patterns, seasonal variations, and economic trends, banks can predict cash demand at ATMs. This enables them to optimize cash replenishment schedules, minimize idle cash, and ensure ATMs are adequately stocked to meet customer needs while controlling operational costs.
Cash forecasting is critical for ensuring that the organisation has enough cash to meet its financial obligations. This should outline the procedures for creating cash forecasts, including the tools and methods used. In addition, Cash flow analysis is an essential tool for managing cash effectively. This should describe the procedures for analysing cash flow, including how to identify cash inflows and outflows and how to manage cash shortfalls.
The third component of a cash management procedure manual is the cash collection and disbursement. This section details the policies, procedures, and controls for receiving and paying cash transactions. It covers the topics such as invoicing, payment terms, credit management, bank accounts, payment methods, reconciliation, and fraud prevention. Cash collection and disbursement are vital for enhancing cash inflow, reducing cash outflow, minimizing transaction costs, and ensuring cash security and accuracy.
This can be quite detailed, and goes to the day to day of the accounting for AP and AR. It may be better in a separate manual from the cash management and cash flow manual. The cash flow/management manual can refer to it. Also often times, the person doing the day to day is different than the person doing the cash flow forecast and reporting.
To enhancing the cash collection and disbursement, you could need: Writing policies and procedures clearly for easy understanding and implementation. Regularly updating the manual to reflect current regulations and best practices. Providing training for staff involved in cash handling to improve competence and accountability. Conducting regular risk assessments to identify and mitigate potential cash transaction risks. Considering the use of technology to automate and reduce errors in the cash collection and disbursement process. Setting up key performance indicators to monitor and evaluate the effectiveness of cash management procedures.
The fourth component of a cash management procedure manual is the cash pooling and concentration. This section explains the techniques, systems, and agreements used to consolidate and centralize cash balances across different accounts, entities, or currencies. It also defines the criteria, rules, and limits for transferring and sweeping cash among accounts. Cash pooling and concentration are important for maximizing cash availability, reducing idle cash, lowering borrowing costs, and managing currency exposure.
Use cash pooling to decide whether to pay a loan or use the available funds to prudently invest in higher yielding but secured financial instrument. Use cash availability to avail of purchase discounts.
le cash Pooling ou centralisation de trésorerie c'est outils de gestion utilisé en généralement par les grands groupes afin d'optimiser le flux de trésorerie de toutes les filiales selon les besoins de chacune et réduire considérablement les agios, et utilise l'excèdent pour les placements a court ou moyen terme "DAT"
The fifth component of a cash management procedure manual is the cash investment and borrowing. This section outlines the policies, procedures, and controls for investing and borrowing cash in the short-term market. It covers the topics such as investment objectives, risk appetite, portfolio diversification, counterparty selection, collateral management, interest rate management, and performance measurement. Cash investment and borrowing are essential for earning returns on excess cash, securing liquidity on deficit cash, and managing interest rate risk.
The sixth component of a cash management procedure manual is the cash reporting and analysis. This section describes the formats, contents, and frequencies of the reports and analyses generated and distributed by the cash management team. It also specifies the tools, metrics, and benchmarks used to monitor and evaluate the cash management performance and results. Cash reporting and analysis are key for providing visibility, transparency, and accountability for cash management activities and outcomes.
It is not a one size fits all, seek out an FP&A tool within your budget that enhances your cash reporting and can provide real-time data integration from multiple sources, enabling customizable reports, advanced analytics for trend analysis, KPI tracking, scenario planning and more.