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Cash Management - Methodologies and Strategies

Duration: 1 day
  • Introduction to Cash Management
  • Cash Flow Budgeting
  • Optimizing Your Working Capital
  • Using Cash Pooling and Netting
  • Using Sweep Accounts
  • Controlled Investment and Lock-box Accounts
  • Policies and Procedures for Cash Management
The objective of this seminar is to give you a practical understanding of methods and tools applied in cash management.

We start with general introduction to “cash management” and explain how good liquidity management can enable companies to achieve optimal profitability from under-utilized funds and increase control over their cash flows.

We then explain how the sources and uses of the firm’s cash can be identified and how cash inflows and outflows can be assessed by looking at known assets and liabilities and from budget simulations. We also explain how critical “trouble spots” and the firm’s vulnerability to cash flow shortfalls can be quantified.

We then present and explain a number of tools and methods that you can use to change idle funds into working cash. One strategy is to optimize your working capital using “just in time” inventorying and other techniques. Another method is “pooling”, which will enable you to minimize interest expense by off-setting (“netting”) debit and credit positions while preserve autonomy, control and record-keeping without having to actually move funds. We also explain how notional pooling can be used in conjunction with “target balancing” and “automated investments”. Other tools include “controlled-investment accounts”, “end-of-day sweep accounts” and “lock-box accounts” that can be set up with the assistance of a big money center bank or regional bank.

Finally, we discuss how a policy for cash management can be formulated and implemented to ensure that adequate control procedures have been put in place and maintained to secure cash collections and cash handling at all levels of the organisation.

Day One

09.00 - 09.15 Welcome and Introduction

09.15 - 12.00 General Introduction to Cash Management

  • What is Cash Management?
  • The role of Cash Management in the firm’s overall financial management
  • How good cash-management practices can influence your company's growth and survival

Cash Flow Budgeting

  • Identifying the sources and uses of cash flows from looking at the Balance Sheet and the Statement of Cash Flows
  • Using budget simulations for measuring (uncertain) future cash inflows and outflows
  • Identifying and quantifying critical “trouble spots” and vulnerabilities to cash flow shortfalls
  • Case study
  • Exercises

12.00 - 13.00 Lunch

13.00 - 16.00 Tools and Methods Optimizing Cash Usage

  • “Just in time” inventorying
  • Minimizing interest expense pooling and netting of debit and credit positions
  • Using Electronic Transfer Systems for collecting receipts and making payments
  • Using target balancing
  • Using automated investments
  • Using controlled-investment accounts
  • Using end-of-day sweep accounts
  • Using lock-box accounts
  • Using short-dated money market instruments to optimize return on cash
  • Identifying emergency sources of funding
  • Case studies
  • Exercises

Formulating and Implementing Policies and Procedures for Cash Management

  • Establishing control procedures for securing cash collections and cash handling at all levels of the organization
  • Defining responsibilities in cash management
  • Procedures for billings, collections and deposits
  • Procedures for foreign transactions
  • Policies and procedures for internal controls
  • Cash management review and reporting requirements
  • Compliance with law and regulations
  • Comprehensive case study: Cash management policies and procedures at the US Government

Evaluation and Termination of the Seminar