hola , creo que un artículo que escribí hace tiempo te será útil y te permitirá entender un poco mas de cash managment, sino lo sientes así , escribeme y te ayudo con gusto

by desde tequisquiapan Qro.

_____________________________________Nino Ferrari M



Good Cash Management is Good Risk Management





NFM==>An uncertain and rapidly changing global environment evident in 2005 requires

sound cash management practices. Improved cash forecasting, contingency planning

and developing supportive banking relationships are paramount.

NFM==>Ongoing development of outsourcing solutions for working capital functions is

providing opportunities for Treasurers to lower processing costs and reduce working

capital requirements.

NFM==>Continued development of cash management systems and Internet based on-line

banking services is fostering improved cash management practices.

.

Demand is growing for better practice international cash management techniques as

companies increasingly develop a global presence and supply lines become more

interdependent. This goes hand-in-hand with global trends such as international

accounting standards and the focus on corporate governance.

Uncertainty of cash flow is often defined as the major cause of business risk. Therefore, cash

management is the core risk management activity of corporate treasuries. A strong cash

management capability is the basis for all other financial risk management activities. Events

in recent times have significantly increased the focus on understanding your cash flow:

• Market liquidity has evaporated quickly as a result of events such as September 11, and

is an ongoing issue in 2005 with increased terrorist activity.

• The sudden collapse of major companies (such as Enron) has revealed that profit

outcomes and projections can be unreliable. Cash flow has returned as one of the better

indicators of the performance and credit worthiness of an entity.

• The introduction of international accounting standard IAS 39 and the hedge effectiveness

tests to qualify for hedge accounting has necessitated upgrades in systems. When cash

flow hedging, there is a need to closely match the hedge arrangement with the underlying

cash flow.

• The increased emphasis on corporate governance practices and the introduction of new

regulations and codes of conduct (e.g. Sarbanes-Oxley Act in the US) requires tighter

control over a company’s’ global liquidity.

Cash is the lifeblood of any company and the effective marshalling of this precious resource

can add value to a company’s activities, afford it more financial flexibility, lower its funding

costs and reduce risk. So, in a globally competitive environment, characterised by

unpredictable and non-transferable event risk, it is critical to address cash flow management

to anticipate and prepare for continuous and sudden change.

From a corporate treasurer’s perspective, cash management can be defined as the effective

planning, monitoring and management of liquid and near-liquid resources. In an uncertain

environment, “planning” and “contingency planning” takes on greater significance.

Effective management of cash and banking relationships could be the difference between a

healthy entity and one that collapses. For instance, sound cash management practice can

ultimately translate into better credit ratings that give organisations the flexibility to pursue

aggressive growth strategies.



The Importance of Accurate Cash Flow Forecasts

A cornerstone of effective cash management is the capacity to produce timely and accurate

cash flow forecasts. Accessing the appropriate information and in a timely manner is often an

uphill battle. Without education and a collaborative corporate culture, endeavouring to

convince business units of the importance of accurately forecasting cash flow is difficult.

The 2002 Australian Corporate Treasury Survey (undertaken by Ernst & Young and The

Finance and Treasury Association) of corporate treasurers revealed that 25% of companies do

not undertake daily cash forecasts and that a number remain dissatisfied with the reliability of

monthly and yearly cash flow forecasts.

Accountability and internal control over key cash flow processes should be encouraged.

Ownership in key cash flow processes is important. This facilitates better internal control and

reduces the risk of unreliable forecasts. It might be possible to tie accurate forecasts to

remuneration outcomes.

Hedging expected cash flows under the new IAS39 accounting standard for financial

instruments demands more accurate forecasting. The risk of non-compliance with the tough

hedge effectiveness rules is that ineffective hedges add volatility to reported profit. It is a

requirement of IAS39 that hedges must remain within a band of 80-125% of the expected and

actual cash flow outcomes to obtain hedge accounting treatment and minimise the impact of

on earnings.

Growth in Outsourcing Working Capital Solutions

In the past two years, treasurers and their banking partners have devoted more time to freeing

up internal capital. In most companies there is plenty of scope for improvement.

Working capital processes in the Asian region are still largely paper-based and outsourcing

provides an opportunity to automate and lower processing costs. Improved working capital

processes can release cash reducing debt requirements, thereby lowering funding costs.

Moreover, there is potential to improve controls, for instance by ensuring appropriate

separation of duties, and hence reduce operational risk when outsourcing cash management

processes.

Accounts payable and accounts receivable services are among the increasing array of working

capital outsourcing services provided by banks and other third party suppliers. Companies are

also centralising working capital processes, often through the establishment of shared service

centres, which is making it easier to outsource.

Companies should develop the optimal combination of in-house and outsourced functions.

Non-essential high-volume, low-value transactional and support processes may be more

appropriate to outsource, while the strategic and policy activities are best kept in-house. As

the corporate treasurer is responsible for key areas of risk, there can be no loss of control over

key risk management activities such as control over bank accounts and banking relationships.

Lately, there is a trend for banks to outsource their back-office functions. Companies should

ensure these developments deliver fee savings and do not adversely impact service delivery.

This can be explored through the regular review of fees and service that normally is part of a

transactional banking agreement or alternatively look to re-tender the business.

Online Banking Services and Cash Management Systems

The year 2005 has seen the emergence of technology offerings with strong supporting

business cases. Like the phoenix, they have risen from the ashes of the dot-com wreckage.

They are no longer “just blue sky”!





Technology is now supporting the push for best practice in working capital management. But

technology does not replace the need for well-designed processes and procedures surrounding

cash management. There continues to be rapid development in the following areas:

• Internet banking;

• E-procurement (fulfilment, billing and collection);

• Electronic bill presentment;

• Cash pooling and netting systems; and

• Straight-through processing

Work continues on the development of a global and industry-wide standard for payment

services, which should reduce risks and optimise global cash management.

Use of the Internet for online cash management continues to grow, although treasurers

continue to have concerns over security. The use of the Internet for establishing letters of

credit and other trade transactions is expected to grow over the next few years. Transacting

online spot and forward foreign currency transactions continues to increase.

These trends provide opportunities for treasurers to automate the “quote-to-cash” cycle with

resulting savings from reducing cash requirements and eliminating manual processing costs

and errors. Errors and process exceptions add significantly to costs and delay cash inflow.

Treasurers should investigate these developments and utilise those technologies and systems

that add value to their cash management processes. These systems should be integrated to the

in-house systems to facilitate straight-through processing.

The Global Economy and International Cash Management Techniques

Increasingly, companies are operating in a global economy and in different countries.

Integration of markets and business supply chains not centred in one place means that a

regional or global approach to cash management is optimal for global businesses. But

integration creates a different risk profile and may require a different risk management

approach to cross-border transactions and treasury activities.

The growing focus on corporate governance practices and the introduction of associated laws

(e.g. Sarbanes-Oxley) requires greater accountability and transparency. Global companies

need to better understand their global cash position.

The treasurer needs to know where the cash is and how to consolidate that cash to fund the

business and optimally invest the surplus. In the Asia-Pacific region it is becoming easier to

manage cash across borders although it still presents a challenge for treasurers. They need to

be conversant with the different tax laws, currency controls, banking practices, country risks

and legal systems and how these factors impact cash management and create “arbitrage”

opportunities.

Because of these varying conditions, it might not always be optimal or possible to aggregate

cash into one country. For example, it is reported (The International Cash Management

Newsletter published by The Association of Corporate Treasurers UK, May 2005) that the

Asia-based Jardine Matheson group prefers not to use regional or global cash pooling to any

significant extent because of the tax and regulatory complications. Rather than centralisation,

the approach might be to establish procedures to control cash management activities in other

countries. Daily cash management functions are still performed by the local treasury staff.

Banking relationships are maintained on a local basis but centrally controlled.

Many companies increasingly are acquiring or merging with offshore businesses. An

important requirement of the treasurer is to understand the cash management processes of

these businesses and integrate them with their existing company policies. Treasurers should

look to develop relationships with banks that can deliver global solutions.

Conclusion: Better Cash Management Practices In Uncertain Times

1. It is critical to establish supportive banking relationships that not only underpin growth but

are there for times when there is a cash crisis. Sufficient funding lines should be established.

Your banks should understand your business and your needs. Don’t wait until a cash crisis

happens – work on the banking relationships now.

2. Establish a contingency plan for cash management processes. Have back-up systems in

place and use technology to manage cash in crisis situations. For example, video/teleconferencing

and the Internet make it possible to communicate and manage cash across

international borders, particularly at a time when travel between countries is not possible or

restricted.

3. In an uncertain environment, it is important to understand the cash flow cycle and the

elements of cash in the business and their business impact. Accurate forecasts increase

available cash by reducing the cash buffers and enable surplus cash to be invested with

confidence in the longer term and generally higher yielding investments.

4. Analyse the cash flow impact of expected economic conditions, technological changes,

regulatory changes and other external factors. Stress-test the cash flow projections for

unexpected changes to the internal and external environment in which the company operates.

Recent development of “Earnings/Cash Flow-at-Risk” models can assist with scenario and

stress-testing.

5. An integrated approach should be taken to the total cash flow cycle, and the relationship

among the various cash flow streams should be analysed and understood. The statistical

relationship between different cash flow streams should be identified and evaluated. In effect,

a portfolio approach is utilised to ascertain the extent of the impact on one cash flow from

movements in other cash flows. From this analysis, offsetting movements and cash flow gaps

can be identified.

6. Systems for managing the effectiveness of cash flow hedges arrangements under IAS 39

will become imperative in order to retain the hedge accounting treatment. Companies should

look to develop or acquire these systems.

7. Explore and utilise the latest online technology and electronic cash management systems to

lower processing costs and reduce cash tied up in the business.

8. Look to outsource working capital functions where there are real savings or risk-reduction

and service benefits.





Nino Ferrari

tequisquiapan@gmail.com