cash management the collection & disbursement of public funds controlling cash collection &...
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CASH MANAGEMENTThe Collection & Disbursement of Public Funds
Controlling Cash Collection & Disbursement
• Dual responsibility• Receipts maintained in a
location separate from cash & checks
• Certification of vouchers
Managing Cash Balances• Safety • Liquidity• Maximize pool of funds
available for investment– Concentration Accounts
– Zero-balance accounts
• Highest yield
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Objectives of International Money Managers
Bringing the company’s cash resources within controlAchieving optimum conservation and utilization of the funds
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Key areas of International Cash Management
OrganizationCollection and disbursement of fundsNetting of interaffiliate paymentsInvestment of excess fundsOptimal level of worldwide cash balancesCash planning and budgetingBank relations
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Organization
Operate with smaller amount of cashSupervision is more centralizedBetter service and foreign exchange from banksProper allocation of funds
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Collection of funds
Need for accelerating collectionsHow to accelerate collection of receivables
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Disbursement of fundsImportance of disbursement of fundsReview of disbursements
Payment instruments being used (checks, drafts, wire transfers, etc.)Bank charges and internal costsTechniques being usedTime involved for processing of instruments
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Payments netting in International Cash
Management
Need for payments nettingProcedure involved
Only netted amount is transferred (bilateral netting)Netting center (multilateral netting)
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Payments netting in International Cash
Management (contd.)
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Payments netting in International Cash
Management (contd.)
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Investment of excess funds
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Optimal level of worldwide cash balances
Centralized cash management involves transfer
of an affiliate’s cash in excess of minimaloperating requirements into a centrally
managedaccount also known as a cash pool.
Procedure andBenefits
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Cash Planning and Budgeting
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Cash Planning and Budgeting (contd.)
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Bank Relations
Importance of good Bank RelationsCommon problems in Banking
relationsToo many relations High Banking costsInadequate reportingExcessive clearing delays