Cash is one of your most valuable resources, but potentially the least productive of all your assets. Good cash management will maximize the availability of cash, reduce your interest costs, and establish safeguards over cash transactions.
|
MANAGEMENT OBJECTIVE As an aggressive manager you should always be looking for ways to free cash. When successful, the resulting previously untapped reserves will be used to either reduce borrowing, execute investments, or be reemployed back into the business. |
|
The availability of adequate cash is essential to the survival of most businesses. Lack of sufficient cash flow can destroy a business faster than any other single financial or operational element. As your financial consultant, we can provide you with cash management advice to not only reduce costly interest expense, but improve your ability to develop and implement a variety of decisions, such as new-product development, acquisitions and divestitures, and financing alternatives. |
|
IMPROVED CA$H AND CREDIT POSITION
By definition, an effective cash management program provides safeguards on cash, identifies fund inflows and outflows, the timing of each, and presents opportunities to increase the utility of cash. Given this information, management can expect to have few emergency cash requirements resulting from unanticipated events.
| SECURITY | All businesses should provide an adequate but effective system for safeguarding cash from waste, fraud, and inefficiency. This same system must promote accuracy and reliability in accounting and reporting cash transactions. |
| CASH FORECASTING |
A reliable cash forecast is a must. If a firm is able to automate the cash forecasting function, it can improve the forecast by simulating multiple scenarios and contingencies without undue analytical time. The more accurate a cash forecast is, the more efficient management's overall control over cash and credit. If an enterprise has an accurate cash forecasting system, financing requirements can be more precisely identified. Not only will the amount of the funds required be known, but the timing of the short-term credit demands can be identified as well. |
| CASH FLOW EFFICIENCY |
Generally, cash management techniques revolve around methods for accelerating the flow of cash from outside sources into the firm and slowing the stream of cash moving out of the business. The goal is to employ resources in the most efficient way possible without taking advantage of customers and vendors. |
| CASH UTILITY | Effective cash management involves making sure the investment power of available cash is not wasted. |
WE CAN HELP YOU. We can provide the consulting services you need to improve your cash and credit management systems:
Review your control systems over cash
Develop a forecasting model
Select improved collection and distribution procedures
Analyze investment decisions in working assets and cash equivalents
Evaluate current borrowing costs
Recommend new financing alternatives
updated 9/7/97
