Corporate Cash Management. Steven M. Bragg

Transcription

1 Corporate Cash Management Steven M. Bragg

2 Table of Contents Chapter 1 - Introduction to Cash Management... 1 The Nature of Cash Management... 1 The Cash Manager Job... 2 Account Maintenance... 3 Debt Management... 3 Equity Management... 4 Hedge Management... 4 Investment Management... 4 Other Areas... 4 Responsibility for Cash Management... 5 Cash Management Centralization... 6 Banking Relationships... 8 Chapter 2 - The Cash Forecast The Cash Forecast The Short-Term Cash Forecast The Medium-Term Cash Forecast The Long-Term Cash Forecast The Use of Averages The Use of Clearing Dates in a Forecast Automated Cash Forecasting The Reliability of Cash Flow Information Cash Forecasting Documentation The Foreign Currency Cash Forecast The Cash Forecasting Procedure Cash Forecast Reconciliation Chapter 3 - The Bank Reconciliation The Bank Reconciliation The Daily Bank Reconciliation The Proof of Cash Bank Reconciliation Problems Chapter 4 - Cash Management Information Requirements Cash Transfers Purchase and Sale Transactions Liquidity Tracking Interest Income Mark to Market Tracking Foreign Exchange Exposure Tracking Counterparty Risk Tracking Letter of Credit Tracking Supply Chain Financing What If Scenarios Data Feeds Accounting General Information Requirements Manual Features Reporting Requirements The Treasury Dashboard Control Issues The Treasury Management System i

3 Chapter 5 - Cash Receipts Check Receipts Check Receipt Improvements The Bank Lockbox Automatic Cash Application Mailstop Number Remote Deposit Capture Cash Receipts Cash Receipts Improvements Credit Card Receipts Credit Card Receipt Improvements Enter Information in On-line Form Immediately On-line Payment Apps Debit Cards Chapter 6 - Cash Concentration Systems The Need for Cash Concentration Cash Sweeping The Zero Balance Account Multiple Sweep Arrangements Manual Sweeping Sweeping Rules Sweep Problems Sweep Costs Notional Pooling Notional Pooling Problems Notional Pooling Costs Multi-Tiered Banking Cash Concentration Best Practices Cash Concentration Alternatives Accounting for Cash Concentration Transactions The Cash Sweeping Procedure Chapter 7 - Types of Payments Cash Payments Check Payments Float Advantages of Checks Disadvantages of Checks Bank Drafts Procurement Cards ACH Payments Advantages of ACH Impact on Float Global ACH Wire Transfers The Letter of Credit The Standby Letter of Credit Positive Pay The Check Payment Issuance Procedure Payment Procedure Alternatives Chapter 8 - Working Capital Enhancements The Impact of Working Capital on Cash Management Accounts Receivable Enhancements Credit Enhancements ii

4 Billing Enhancements Collection Enhancements Accounts Receivable Policies Inventory Enhancements Product Design Product Record Keeping Inventory Acquisition Inventory Ownership Manufacturing Process Flow Fulfillment Inventory Disposition Inventory Policies Departmental Cooperation Accounts Payable Enhancements Terms Renegotiation Early Payment Discounts Payment Processing Frequency Accounts Payable Policies Researching Working Capital Enhancements Working Capital Forecasting Working Capital Strategy Chapter 9 - Investment Alternatives Investment Guidelines Investment Strategy Repurchase Agreements Time Deposits Certificates of Deposit Bankers Acceptances Commercial Paper Money Market Funds U.S. Government Debt Instruments State and Local Government Debt Bonds The Primary and Secondary Markets The Discounted Investment Formula Accounting for Investments The Effective Interest Rate The Funds Investment Procedure Chapter 10 - Debt and Equity Funding Overview of Debt and Equity Funding The Line of Credit Invoice Discounting Inventory Financing Inventory Financing Agency Financing Leases The Long-Term Loan Debt Covenants The Borrowing Base Debt Risk Issues Restricted and Unrestricted Stock Registered Stock The Accredited Investor Regulation D Stock Sales iii

5 Regulation A Stock Sales Accounting for a Loan Accounting for a Lease Accounting for the Sale of Stock The Line of Credit Borrowing Procedure Chapter 11 - Clearing and Settlement Systems The Clearing and Settlement Process Correspondent Banks Check Clearing Foreign Check Clearing The Automated Clearing House System (ACH) CHIPS Fedwire CHAPS TARGET Continuous Linked Settlement SWIFT Chapter 12 - Foreign Exchange Buying and Selling Currencies Types of Foreign Exchange Risk Risk Management Alternatives Take No Action Avoid Risk Shift Risk Time Compression Payment Leading and Lagging Build Reserves Maintain Local Reserves Hedging Proxy Hedging Types of Hedges Loan Denominated in a Foreign Currency The Forward Contract The Futures Contract The Currency Option The Cylinder Option Swaps Netting Cash Flow Predictions and Hedging Hedging Best Practices Accounting for Hedges The Foreign Exchange Hedging Procedure Chapter 13 - Interest Rates Types of Interest Risk Risk Management Alternatives Take No Action Avoid Risk Asset and Liability Matching Hedging The Forward Rate Agreement The Futures Contract Interest Rate Swaps Interest Rate Options iv

6 Interest Rate Swaptions Accounting for Interest Rate Hedges Chapter 14 - Cash Management Controls The Cash Forecasting Controls Environment The Cash Concentration Control Environment The Funds Investment Control Environment The Foreign Exchange Hedge Control Environment The Debt Procurement Control Environment The Stock Issuance Control Environment Additional Cash Management Controls Fraud Related Chapter 15 - Cash Management Metrics Cash Management Metrics Cash Conversion Cycle Days Sales in Accounts Receivable Days Sales in Inventory Days Payables Outstanding Fixed Asset Turnover Ratio Actual Cash Position versus Forecast Borrowing Base Usage Average End of Day Available Balance Earnings on Invested Funds Unhedged Gains and Losses Glossary Index v