CASH MANAGEMENT

 It is the process of collecting,

managing and disbursing cash
as well as using it for short-
term investment.
It is a key component in
ensuring a bank’s financial
stability and solvency.

Banks with cashflow problems

have no margin of safety in
case of unanticipated expenses,
innovations or expansion.
Poor cashflow makes it also
hard for the banks to hire
and retain good employees.

Banks with cashflow problems

have no margin of safety in
case of unanticipated expenses,
innovations or expansion.
 GOAL OF
CASH MANAGEMENT

 To manage the cash balances

of the bank in such a way as
to maximize the availability
of cash when needed. Hence,
avoid the risk of insolvency.
 CASH OPERATIONS

 Cash deposits into a client’s

own or other bank client’s
current or payment card
account
 Withdrawals of cash from
current account

 Withdrawals of cash from

the payment card account
 Cash foreign currency exchange

 Checks banknotes against

counterfeits

 Exchanges of banknotes into

coins and vice versa
 CASH MOBILIZATION

 Involves the techniques used

by banks to assemble funds
and make them readily
available for disbursement
and investment
 It is based on a cash budget
that provides an estimate of
the bank’s cash requirements
for disbursement by months,
weeks or days
 FUNCTIONAL AREAS IN
CASH MOBILIZATION

ACCELERATION OF RECEIVABLES
this is done by increasing or
accelerating collections so as
to increase available cash to
meet obligations of bank
 FUNCTIONAL AREAS IN
CASH MOBILIZATION

CONTROL OF DISBURSEMENT
Disbursements are the funds
that must be paid out to clients
and others who provide services
at a fee to the bank. Includes
salaries of employees.
Timing of disbursements has
to be well planned so liquidity
position of the bank will not be
affected.

Disbursements should be paid

only when they are due.