What Are the Different Cash Handling Procedures?

Cash flow refers to the process of cash flow in the enterprise, and it is the channel for the company's cash flow. If you compare cash flow to "blood", then the cash flow is "blood vessels" and "channels" for "blood" flow.

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Under the traditional profit-centric financial management model, the company's physical processes can be divided into production and management processes, investment processes, and financing processes. Cash is regarded as a kind of physical resource of the company. The cash flow is implicit in the physical flow and is not easy to identify. At this time, the research on the management and control of the cash process is concentrated on the internal process of cash itself, because cash as an entity, its own process is relatively clear. A complete internal cash flow process usually involves cash flow organization, positions, authorization, and procedures for handling cash receipts and payments. For example, the necessary procedures for a cash receipts and payments business include application, approval, recording, payment, and inspection. ^[1]

Whether the cash flow is reasonable and smooth can tell whether the cash flow of the enterprise is safe. To keep corporate cash flow safe, cash processes must be continuously improved and optimized. ^[1]

The cash process optimization is based on the continuous improvement and optimization of the business process or entity process corresponding to the cash process. There are two criteria for judging whether the cash flow is optimized: the effect of financial management itself, that is, whether the cash flow optimization can make financial management effective, so as to achieve the goal of corporate financial management; Whether the final result of cash flow optimization is conducive to the company's production and operation decisions, so as to achieve the company's ultimate goal.

Specifically, in the whole process of production and operation of an enterprise, if the analysis starts from the organization of cash flow, the organization of cash flow must be compatible with the organizational structure of the enterprise. On the contrary, if one or other problems occur during the organization of cash flow, It shows that the organizational structure of enterprises needs to be improved. Based on this idea, enterprises should determine the corresponding business, management and control positions according to the direction of cash flow generation and outflow, ensure that the cash flow organization forms a strict internal control system, ensure that fewer errors are made, and fraud is prevented. To this end, each cash flow business management and control position should be given corresponding powers to ensure that they perform their duties fully and effectively. At the same time, it is stipulated that the handling of any cash receipts and payments business must complete the necessary procedures such as application, approval, recording, payment, and inspection to ensure the legality and reasonableness of cash receipts and payments.

The guarantee of cash flow organization, post setting, authorization, and procedures for handling cash receipts and payments business is only to ensure a reasonable and smooth cash flow. The role of cash flow needs to be reflected through the optimization of cash flow.

The cash flow process optimization includes at least three aspects: the overall improvement of the existing process, the optimization of the delay phenomenon in the cash process, and the optimization of the process interruption phenomenon.

The overall improvement of the existing process means that the company's original cash flow channel is not smooth, or even if it works, but the cost is high or the efficiency is low, so it is necessary to plan another "road" to ensure that cash is in Smooth circulation. When companies improve existing processes, they can obtain solutions for each "optional channel" based on analysis and forecast or historical experience. Through the comparison of existing channels and optional channels, the costs and benefits of different channels are analyzed, and suggestions for the overall optimization of the cash flow are made.

The optimization of cash flow delays and interruptions is a partial optimization of the cash flow channel. Cash flow delay refers to the fact that cash may reach the end of the "road" later than expected during the flow of cash. Therefore, it is necessary to check this road and analyze the reasons for late arrival to propose an optimal solution. The interruption of cash flow means that cash is stuck at a certain point on the road during the flow and cannot reach the end point. Therefore, it is necessary to repair and increase the road to ensure the smooth flow of the road.

By analyzing the cash flow channel, it is possible to optimize the cash flow, and the optimization of the flow can only achieve the desired effect under the support of the system if it is combined with the management system of the enterprise. In addition, the management of existing cash processes also requires institutional support. An enterprise's cash management system is like "traffic regulations." The more rational and strict the traffic regulations are, the more smoothly road traffic can be ensured and traffic accidents can be avoided. Similarly, the efficiency of the cash flow "road" operation and the frequency of errors are also closely related to the quality of the cash flow management system.