Cash Management and Banking Relationships Nicole

Transcript:Cash Management and Banking Relationships Nicole:
Cash Management and Banking Relationships Nicole Hackmann Director of Banking Office of Missouri State Treasurer, Clint Zweifel Cash Management Defined as the systematic gathering of information about an entity’s collections, disbursements, and balances and the use of that information to manage the funds available to the entity effectively. Cash Management 4 basic functions: Deposits Funds concentration Disbursements Information and Control Deposits Where do your funds come from? Physical Deposits at your contract bank Imaged Deposits sent to your contract bank Maturing Investments Electronic Receipts: ACH Wire Transfer Transfers from other entities at your contract bank Prior Day Account Balances Deposits How many of these items can you project or estimate? Amounts deposited reported by depositor Maturing investments from reports Advance notice of expected electronic receipts Transfers from other entities at your contract bank Late receipts from the prior day, such as wire transfers Funds Concentration Do you have monies in multiple accounts? Or in multiple banks? Within the same bank, can you utilize bank products to consolidate your cash, such as zero balance accounts? Across banks, determine what cash you don’t need at each bank and pull that money into your main account to invest. You can send ACH credit transactions from each bank, or pull the money into your main account with ACH debits originated from your main contract bank. Disbursements How are your funds disbursed? Outgoing ACH files Outgoing wire transfers Checks clearing the account Bank transfers to other entities or accounts Investment purchases Disbursements How many of these items can you project or estimate? Advance notice of outgoing ACH file totals Outgoing wire transfers requested in advance Estimates of check clearings based on historical information Advance notice of bank transfers to other entities or accounts Investment purchases with future settlement dates Information and Control Cash flows tie all the pieces together to allow the entity to take advantage of investment opportunities whenever possible. Opening Account Balances + Receipts + Funds Concentrated – Disbursements = Amount Available to Invest Information and Control Information is critical for effective cash management Due dates – for both receipts and large payments Federal draws Tax payments Debt Service Large Distributions Payroll Payment estimates for large program payments: Debt Service Payroll Distributions required by law Information and Control Information collected is used for both the management of daily cash flow, as well as to create a cash flow forecast to assist the investment