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

Objectives of International Money Managers

Bringing the company’s cash resources within controlAchieving optimum conservation and utilization of the funds

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

Organization

Operate with smaller amount of cashSupervision is more centralizedBetter service and foreign exchange from banksProper allocation of funds

Collection of funds

Need for accelerating collectionsHow to accelerate collection of receivables

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

Payments netting in International Cash

Management

Need for payments nettingProcedure involved

Only netted amount is transferred (bilateral netting)Netting center (multilateral netting)

Payments netting in International Cash

Management (contd.)

Payments netting in International Cash

Management (contd.)

Investment of excess funds

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

Cash Planning and Budgeting

Cash Planning and Budgeting (contd.)

Bank Relations

Importance of good Bank RelationsCommon problems in Banking

relationsToo many relations High Banking costsInadequate reportingExcessive clearing delays