Question

given the current enviornment, if you were in charge of a hospital, what type of things would you do to maintain your cash flow and your cash reserves?

Answer 1

1. Utilise the credit period provided by the supplier to earn interest benefits by investing the funds.

2. Avail cash discount available if supplier provides, on payment before due date. But also to work out to know if the cash discount benefit exceeds the cost of interest paid on credit facilities. If yes, then go forward, subject to enough liquidity.

3. If there is any excess cash (cash reserves), invest in liquid securities or deposits where interest is good and investment is risk free.

4. Ensure to mention credit period allowed to debtors is not more than credit period allowed by creditors.

5. Approaching and following up with debtors / insurance companies to pay dues on time or before time.

6. Authenticity by way of approval by senior manager for making cash payments in excess of certain amount to avoid frauds.

7. Cash flow (both outflow and inflow) forecast to arrange funds for upcoming huge payments.

8. Proper, timely and appropriate accounting for cash outflows and inflows transactions and reviewing the cash balances time to time, to avoid frauds and liquidity problems.