Chapter 16 -
Developing a cash management system

Now that you understand how to better manage your company’s cash flow, why not consider all these ideas and develop a comprehensive cash management strategy? To establish a strategy, look at the various players and departments in your company and develop ways to help each contribute to better cash management and business practices.

Pick a leader
First, you must put someone in charge of the process. Your top candidate might be your company’s controller or internal accountant. This person should be able to talk freely and persuasively with almost everyone in the company. If you don’t have a controller, consider an outside CPA or take on the role yourself.

Give your leader ultimate accountability for achieving the result. Tasks performed by committee rarely result in any real change. Insist that your cash management leader report on the project at every management meeting so that everyone understands the importance of good cash practices.

Provide training and support
Start with this book, but don’t stop with it. Good cash management practices require diligent and persistent study on the part of your cash manager. Many courses are offered through trade groups, such as the American Institute of CPAs, the State Society of CPAs, banking associations and the American Trucking Associations’ National Accounting & Finance Council.

Ambitious cash managers might seek the certified cash manager (CCM) designation. This is a rigorous course of study, and examinations are sponsored by the Treasury Management Association. Each June, the TMA offers a standardized exam covering the various disciplines of treasury management, including banking and payment systems, disbursements management, collections, cash concentration, bank relationship management, cash flow forecasting and short-term borrowing and investing.

Follow a systematic plan
This book outlines a systematic plan to examine your company’s starting point in cash flow practices. Using these and other benchmarks, focus on your company’s strengths and weaknesses. Rate your company’s performance on each tactic and strategy. Once you identify the problem areas, concentrate on actions you can take to get fast results.

Adopt a philosophy of measuring performance – especially the time in your cash cycles. By charting your cycles, you can begin to question how long certain cycles take to complete and get everyone involved in shortening or lengthening that time.

Consider outside help
A variety of assistance is available, both free and for hire. Most major state universities, for example, have a Small Business Development Center, sponsored in part by the U.S. Small Business Administration. Ask business schools whether students might consider a cash management study of your company for class credit. Or seek help from a CPA or consulting firm. Ask bankers or other lenders for leads on other possible consulting assistance.

In Summary
It may take up to a year to reengineer your cash-management practices. It will be up to your entire team to help your company reach the combination of cash management practices that’s right for you.