Question

Vico Bank Ltd. has just been issued with a Universal Banking License (provisionally) by the Bank of Ghana (BOG) to operate business of banking in Ghana. The Bank is duly incorporated in Ghana and has fulfilled all the initial legal and regulatory requirements. However, Vico Bank Ltd. failed to meet its target for the first quarter IN 2020 due to COVID-19. The Board and Management of the Bank has decided to engage a consultant who has an in-depth knowledge, skills and understanding in treasury operations and risk management to set-up and manage the treasury department of the Bank. The Board and Management have decided to employ you as the new Treasury Manager. You have been called upon by the Board of Vico Bank Ltd. to make a detailed 12 hour presentation on how you are going to organize the treasury department. (a) Suggest five strategic ways you can help them to improve their cash management (b) Explain how you are going to implement them.

Answer 1

Cash Management :

Cash management involve reducing :

-Extra amount of cash in hand .

-Utilize cash effectively .

-Maintenance optimum balance of cash which meet planned expenditure ans also unexpected expenditure .

-Managing cash flow which involve cash receipt and payment . Cash management here to manage working capital of the business .

a)

These are the various strategies to make cash management effective :

These are the strategies :

-Collection policy of the company should be straight forward and also properly maintains of account reliable balance is must and for this proper software is must .

-From time to time discount given to the customer regarding prompt payment and invoice are designed in such a way so that by giving offer collection become faster .

-Proper management for inventory is must which will reduce time , effort and cost and also check point is applicable for the inventory which become ideal and also identify slow moving item .

-In order to collect cash faster certain software tools are to be speed up so that payment directly into the companies bank account .

-Efforts should be made to cut down the cost of delivered the product which will effect to increase margin .

b)

For implementation of the cash management

-Proper cash planning is necessary to meet short term and long term need this also include financing for the current asset , fixed asset and also make payment for operating expense .

-Managing cash flow also one of the strategy used for effective cash management in which effort is made to manage cash inflow and cash outflow so that business may speed up cash collection and delay cash payment .

-Business always determine optimal cash balance so that business make some ideal cash in order to meet day to day obligation and also some cash need for unforeseen transaction .

-For effective cash management system business must invest ideal cash after it kept for working capital need so that day to day transaction are to be fulfilled and no extra cash become ideal .