1、Best Practice Financial Processes: Cash Management,Cash Management - Best Practice Objectives,Cash Management Objectives,Organisation,People,Processes,Controls,Measures,Information Systems,Manage short term liquidity and long term funding requirements Minimise companys cost of capital Efficiently ma
2、nage the processing of cash transactions Effectively forecast cash requirements Manage petty cash efficiently,Centralised cash office & pooling Integrated with Accounts functions,Record/manage receipts and payments Manage cash position Perform reconciliations Perform period end closing & reporting,P
3、olicies & Procedures Bank liaison Authorisation limits Internal controls,Speed of reporting Accuracy of forecasting Return on Capital,Integrated bank account with sub-ledgers Automatic bank reconciliations On-line/real time Cash forecasting,Cash management skills Liaison with financial institutions,
4、Process Features,Segregate cash management from accounts receivable and accounts payable functionsLocalise cash collectionMinimise level of petty cash requirementsTransmit mechanisms evaluated on cost and risk basisCreate netting arrangement with internal business partnersObtain pan-European banking
5、 facilities that allow netting off of account balances,Map cash collection and payment cycles, identify actions to minimise these periodsMinimum number of banking relationships maintained to ensure coverage and purchasing powerClear unmatched cash within 1 dayRegular reconciliation of all cash books
6、. Maintain petty cash imprest systemsObtain access to on line bank statementsMonitor the cost of cash transmission mechanisms,Cash balances reported on a daily basis by account and business centresTreasury determine short term cash requirements from cash forecast and daily reportCash surpluses manag
7、ed by TreasuryPetty cash/foreign currency floats periodically auditedCompany loan accounts reconciled monthly,Treasury consolidate and manage cash forecast requirementsMonitor bank facilities to minimise interest payments and maximise receiptsForecast cash on a regular basis: rolling 12 month foreca
8、st - annual 5 year ahead reviews,Cash Management - Best Practice Features,Establish and maintain cash control mechanisms,Perform bank reconciliations,Report and manage cash balances,Forecast cash requirements,System Features,EDI used for majority of payments and receiptsComprehensive system security
9、 and password features for paymentMulti-currency systems,.,Transmission used for bank statementsBank remittance notices issued with sales invoicesElectronic reconciliation of bank statement and cash bookCurrency rates available for sterling equivalents,Individual bank account cash balance reports pr
10、oduced on a daily basisSummary consolidated cash reports available on-line to TreasuryIntercompany netting bank accounts reconciled automaticallyIntegrated enquiry from cash book entries to sub-ledgers,Automatic production of cash forecast statements from commitment/accrual accountingProject analysi
11、s and control linked to finance systemsAnalysis by market share/product cost etc,Cash Management - Best Practice Features,Establish and maintain cash control mechanisms,Perform bank reconciliations,Report and manage cash balances,Forecast cash requirements,Cash Management - Critical Success Factors,
12、These are a summary of the key business requirements, which must be met to achieve Cash management objectives.Electronic Interfaces with Accounts Payable, Accounts Receivable, Payroll and General Ledger Establish and maintain good relations with banks Agree Finance terms Reconcile bank accounts on a
13、 regular basis EDI for the majority of payments and receipts Automated bank reconciliation systems and processes Cash monitoring and forecasting techniques provide first class accuracy Integrated on line systems to audit trail cash transactions Operate minimum petty cash and foreign currency floats
14、Separation of Cash management staff duties from other finance operations,Cash Management - Measures / Cost Drivers,Measures Cost of Capital Number of bank accounts Number of banking relationships Number of outstanding reconciling items 3 months old Difference of interest rate of cash accounts vs. Mo
15、ney Market rates per currency Percentage of cash transactions effected electronically Number of days in obtaining value for funds Floating days per bank Cost of cash function as a percentage of total finance cost Number of cash transactions per FTE Number of unreconciled cash transactions Number of
16、accounts outside cash pooling,Cash Management - Measures / Cost Drivers,Cost Drivers Electronic payment and receipt mechanisms Number of banking locations and bank accounts Number of international locations System interfaces available for cash entries Types of payments and currencies used Number of
17、petty cash sites Number of transactions per day Extent of government regulation,Cash Management - Level 0 Context Diagram,Cash Management,Budgeting and control,Cash office,Management team,Audit,Purchasing,Accounts receivable,Accounts payable,Payroll,Banks,General ledger,Financial institutions,Cash f
18、orecasting,Cashflow monitoring & forecasting,Check reconciliations,Treasury expertise,Remittances,Commitment details,Petty Cash,Process Receipts,Process Payments,Payroll payments,CM details,Bank Statements,Sales order processing,Sales orders,Cash requirements,Cash Management - Level 1 Overview,Cash
19、Management - Appendix 1 : IDEF Process Flow,The diagram below provides a key to the process diagrams used in this document.,Process / activity,Controls,(i.e.,Procedures Standards Requirements for rework),Output,(i.e.,Information Material),Resources,(i.e.,People Functions IT systems Machines),Input,(i.e.,Information Material),
