Liquidity Management

Management should create and maintain the most effective approaches and systems for cash and liquidity management. Management must prepare in advance for the periods of credit constraints and rising interest rates to ensure access to liquidity at the lowest opportunity cost. Establishing short, intermediate and long-term operating and cash flow budgets and comparing the actual results to the budgets can accomplish this. This enables management to see well in advance when the need for cash will occur. This will enable management to seek and acquire the funds at the lowest opportunity cost. Management should forecast cash flow daily, weekly, monthly, and annually constantly monitoring when they will need funds and the associated cost of those funds.

  • Do you have the right cash management system and processes?
  • Does your organization accurately forecast its cash flows and compare against the actual results?
  • Does your organization accurately prepare operating and cash flow budgets and compare against actual results?
  • Do your banking relationships adequately support your cash and liquidity goals and needs?
  • Does your organization maintain and enforce a credit policy?
  • Has your organization adopted adequate policies and procedures for collecting delinquent accounts?
  • Is the financing and capital structure of your organization adequate?
  • Does your organization have written policies and procedures for appropriate balance sheet management?
  • Are your billing processes as efficient as they could be?
  • Is the float associated with collection of cash as low as it should be?
  • Is the float associated with disbursements of cash as high as it should be?
  • Are you applying the best practices in managing working capital?

If you answered no to any of the above questions, or you are unsure about your cash and liquidity programs, Alan Neal & Associates is positioned to assist you. To learn more about how our value-added services can provide value to your organization, contact:

Alan Neal & Associates, Inc.
240 Forest Avenue Suite 202
Chattanooga, Tennessee 37405
Phone: (423) 756-4076
Fax: (423) 756-4085

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