Introduction:
The term Cash refers to money in coins or notes and Cheques/Instruments
issued on demand deposits in the bank. i.e. money in immediately usable form.
Management in general terms involves, planning, organizing, directing and
controlling of resources to achieve organizational objectives.
Cash Management therefore is the process of sourcing and
acquisition of cash, planning the use of cash, organizing i.e. Creating
relationships between available organizational resources (Cash) and it centers
on responsibility, authority and accountability, directing the use of cash to
accomplish the desired result, through leadership, communication, coordination
and motivation. Controlling is the regulation of the use of cash with
predetermined plans so as to ensure the accomplishment of organizational
objective. The activities described above border on the area of cash receipts and disbursement of cash.
Receipts: Are various collections and donations etc made by members of the church.
Treatment
of Cash Receipts:
The
first step is to sort out cash to be counted according to the different
denominations.
The subject cash to detailed counting
- Strap the notes after counting
- In case of multiple collections add up to know the total cash received.
- Complete a deposit slip for onward payment of cash into the bank.
- Enter cash lodgments into a cash Deposit register.
Finally, ensure that cash lodgment into the bank agrees with
the total cash collected for the day and file away the pay-in-slip. Please
ensure that a separate register is maintained for all cash
collections/receipts.
It is advisable to maintain proper record keeping such that cash received is
lodged into the bank before disbursement is made for various payments.
Cash Disbursements
Disbursement in other words refers to payments made from
funds collected for a purpose.
Cash disbursement must be made by a responsible officer in line with laid down
procedures of the organization.
STEPS TO CASH MANAGEMENT
It is expected that a designated officer with whatever name called, be responsible for the efficient and effective management of cash in the organization because members of the organization are interested in the prudent use of funds. Therefore, the leadership of the organization must ensure stewardship of resources. Stewardship reporting, ensures that assets entrusted to you are safeguarded and well utilize authority delegated to you is well accounted for such as;-
· Custody of the safe and its contents
· Cash evacuation/collection to and from bank
· Cash collection from various sources in the organization
· Supervision of note counters.
· Management of cash holding and maintenance within set limits (Petty cash).
· Provision of adequate security for cash movement
to banks
Holders of keys to the safe.
· The recording of all cash transactions, both inflows and outflows.
Motives for Holding Cash
Investment in cash like any other assets have Opportunity
cost, cash is required
for various purposes:
1. The Transaction Motives: We hold cash here to meet necessary payments in the day-to-day operation of the business e.g. To pay creditors to buy fixed assets etc.
2. Precautionary Motives: This is the amount of cash held above specific transaction requirements to meet contingent ‘payments that might arise. i.e. Cash is held as a buffer or cushion to meet unexpected future payments. Hence emergency payments can easily be made.
3. Speculative Motive: This is the amount of cash held in reserve to take advantage of any unexpected “bargain” purchase (Price Fluctuations), which may arise. The optimum level of cash an organization holds would be determined by any of the motives mentioned above.
The Importance Of Cash Management
The need for Cash Management cannot be over emphasized because too much investment in it ties down funds that cannot yield any income and inadequate investment in it jeopardize an organization’s ability to survive. In Managing cash, the aim is to operate at optimal (most Profitable) level of cash.
Cash Budgeting
This involves a tabulation by defined periods of anticipated cash receipts and cash payments which shows cash balance either surplus or deficits at the end of each defined’ period. The period could be yearly, monthly, weekly or even daily. Cash budget, is only a projection, therefore cash anticipation should be handled with absolute care while cash disbursement should be well anticipated and fully provided for. In keeping to this we prepare; Cash Flow Projection this is necessary to determine the liquidity/viability of a business.
Cash Flow Projection
Cash Flow Projection is a statement that projects the financial requirements of an organization in terms of cash receipts and cash payments. It shows the expected future inflows and outflows. It serves as an aid to planning and decision-making. It is a form of forecast. The cash, forecast helps to determine and plan where a concern is heading. In today’s fast business moving environment you must anticipate the future and prepare for it, without forecast/projection, plan and budgets you can’t steer your organization in the right direction.
Treasury Management
Treasury refers to a place where funds are received, stored and disbursed. Treasury management is primarily concerned with the custody of funds, processing of various transactions, contracts etc. entered into with banks and other financial institutions.
The Main Objectives
of Treasury Management
- To ensure timely and accurate handling of cash/funds.
- To ensure that all relevant control procedures are strictly adhered to.
- To ensure that all relevant records are updated and properly maintained.
- To ensure adequate and effective storage of records of the church relating to all money transactions.
- Ensure that various accounts are promptly updated and reconciled.
Treasury Operations.
It is imperative in the 21st century that organizations invest the idle funds in their possession to enable them create wealth for their members. Reporting in today world has made it possible for skillful professionals to run business organizations for the owners. And make available their stewardship reporting to interested parties. Therefore, there is no excuse enough to allow idle funds in organzations. Funds can be invested in risk — free investments in the money market.
Such investment can be in the areas of:
1. Deposit Accounts
i. Time deposit
ii. Call deposit
iii. Certificate of deposit (CDS)
2. Savings Deposit
3. Treasury Bills
4. Guaranteed Commercial Papers
5. Bankers Acceptance etc.
6. Stocks
The above instruments are traded in short-term basis in the money market except stocks that are traded in the capital market; primary or secondary markets. A money market is where financial intermediations take place between the Surplus Spending Units (S.S.U) and the Deficit Spending Unit (D.S.U) of the economy.
Idle funds can also be invested in co-operative trading societies and cottage industries; etc even in stocks of reputable companies.
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