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Chapter 6
Cash Management

Best Practices

This chapter covers the best practices that can be used to create a more efficient
cash management function. Though this area falls into the finance function at
many larger companies, it is typically under the authority of the controller in a
smaller company, and so is covered in this book.
The best practices in this chapter are primarily concerned with creating an
orderly flow of cash into and out of a company’s coffers, leaving no cash in the
system that is not being properly utilized to the fullest extent. This method frees
up the largest possible amount for investment purposes. The vast majority of
these best practices should be clustered together, since they are complementary,
working most effectively if they are all used at once.
This chapter begins with a discussion of the implementation problems asso-
ciated with each best practice and then moves on to cover the advantages and dis-
advantages of using each one. The final section discusses how to use most of
these best practices as a group to achieve a cash management system with a high
degree of efficiency.

IMPLEMENTATION ISSUES FOR CASH MANAGEMENT
BEST PRACTICES

All of the best practices covered in this chapter are noted in Exhibit 6.1, which
shows the cost and duration of each item. In nearly all cases, cash management
implementations are quite inexpensive and can be completed in a short time. The
reason for these easy setups is that there is no custom programming involved, and
no need to involve other departments. Without these two problem areas, it
becomes an easy matter to install a whole range of best practices in short order. To
make the situation even easier, a company’s bank is usually eager to help install
most of these items, because most of them involve creating close banking ties,
which keeps a company from realistically being able to move its banking busi-
ness elsewhere. A bank can also charge fees for many of these services, which
gives it an added incentive to help out. Thus, cash management is an area in
which a controller can enjoy great success in improving operations.

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