Importance of Daily Policies & Procedures in Cash Flow Management


In the modern economy, corporate treasurers and liquidity managers commit themselves to measuring and reporting on cash flows. To effectively perform tasks, department heads and segment managers set daily and weekly policies and procedures, ensuring that subordinates pay attention to cash movements and signal potential imbalances in real time.

Cash Flow Management

Cash flow management pertains to everything a company does to stay awash in cash, have enough liquidity to cope with operational commitments and show a bright solvency and asset-debt picture. Corporate managers know that long-term, sustainable growth typically comes from building effective customer relationships. However, they also understand that departments heads must have sufficient cash to purchase goods and fill client orders on time. By setting cash management procedures, an organization showcases its strength in financial management and its confidence in the securities exchanges. This is because the business could always raise cash on stock markets to plug potential cash deficits.

Policies and Procedures

To manage daily cash flows, a company's leadership may direct the corporate treasury department to tally daily cash balances and tell department heads how much money the business has on a given day. Corporate treasurers do so by looking at the cash balance at the beginning of the day, estimating aggregate remittances all businesses are expecting during the day and calculating how much money the organization will pay for expenses.

Another daily cash flow policy is having a senior accounting manager review the corporate balance sheet in real time. The manager then can identify adverse cash positions and warn corporate treasurers of a possible cash crunch. In some organizations -- such as investment banks and trading firms -- daily cash management is often a collective effort that involves the contribution of top leadership. For example, a hedge fund's management might monitor the company's cash position all day long, depending on open positions and margin requirements.


Liquidity managers and accounting supervisors set daily cash flow procedures to impart their wisdom about money making and money keeping to various employees, including subordinates as well as personnel who don't work in the cash management function. The idea is to explain to lower-level employees the importance of tracking and calculating cash in real time and to ensure that subordinates see the positive correlation between proper cash management and corporate financial soundness.

Staff Involvement

Various personnel work diligently to ensure that fraud, theft and inadequate cash management do not unsettle a company's operating activities and ultimately cause big losses. These professionals include accounts receivable and payable employees, corporate treasurers, financial managers, accounting supervisors, investment analysts and budget reviewers.

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