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CASH MANAGEMENT The 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

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CASH MANAGEMENT The Collection & Disbursement of Public Funds

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  1. 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 CASH MANAGEMENTThe Collection & Disbursement of Public Funds

  2. Objectives of International Money Managers • Bringing the company’s cash resources within control • Achieving optimum conservation and utilization of the funds

  3. Key areas of International Cash Management • Organization • Collection and disbursement of funds • Netting of interaffiliate payments • Investment of excess funds • Optimal level of worldwide cash balances • Cash planning and budgeting • Bank relations

  4. Organization • Operate with smaller amount of cash • Supervision is more centralized • Better service and foreign exchange from banks • Proper allocation of funds

  5. Collection of funds • Need for accelerating collections • How to accelerate collection of receivables

  6. Disbursement of funds • Importance of disbursement of funds • Review of disbursements • Payment instruments being used (checks, drafts, wire transfers, etc.) • Bank charges and internal costs • Techniques being used • Time involved for processing of instruments

  7. Payments netting in International Cash Management • Need for payments netting • Procedure involved • Only netted amount is transferred (bilateral netting) • Netting center (multilateral netting)

  8. Payments netting in International Cash Management (contd.)

  9. Payments netting in International Cash Management (contd.)

  10. Investment of excess funds

  11. Optimal level of worldwide cash balances Centralized cash management involves transfer of an affiliate’s cash in excess of minimal operating requirements into a centrally managed account also known as a cash pool. • Procedure • and • Benefits

  12. Cash Planning and Budgeting

  13. Cash Planning and Budgeting (contd.)

  14. Bank Relations Importance of good Bank Relations Common problems in Banking relations • Too many relations • High Banking costs • Inadequate reporting • Excessive clearing delays

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