Accounting Best Practices, Fifth Edition

Chapter 6. Cash Management Best Practices

This chapter covers the best practices that can be used to create a more efficient cash management function. Though this area falls into the finance function at many larger companies, it is typically under the authority of the controller in a smaller company, and so is covered in this book.

The best practices in this chapter are primarily concerned with creating an orderly flow of cash into and out of a company’s coffers, leaving no cash in the system that is not being properly utilized to the fullest extent. This method frees up the largest possible amount for investment purposes. The vast majority of these best practices are complementary, working most effectively if they are all used at once.

This chapter begins with a discussion of the implementation problems associated with each best practice and then moves on to cover the advantages and disadvantages of using each one. The final section discusses how to use most of these best practices as a group to achieve a cash management system with a high degree of efficiency.