#1 Get inspired to improve
Consider whether there are any areas in which your cash management practices can be improved. A few ideas could be to:
• Think of ways to collect payments quicker (invoice faster, offer incentives)
• Consider spreading out your payments or pay closer to the due dates
• Review your credit policy
• Plan for cash shortages
• Align your payroll cycle with your revenue stream
#2 Build up your immunity
Have you calculated whether your cash balance is big enough? Having an adequate cash runway is crucial to surviving tough times. Build your provision to a healthier balance and make sure it’s parked it in the best possible bay until its needed. (see matters OF INTEREST – 30 April 2020)
#3 Brighten up your balance sheet
As the old saying goes “look after the pennies and the pounds will look after themselves”. Search through your organisation’s accounts for lazy pots of cash. There may be balances sitting in subsidiaries, partnership accounts or foundations you haven’t thought about. Each little bit adds up and could be working harder.
#4 Make your life easier
Set up processes to be more active – sweep amounts regularly into our funds and withdraw when needed. Make this a habit. Transacting costs nothing and we don’t mind frequent transactions.
#5 Get comfortable with online
One important lesson we’ve learned during this time is that online is the future, and it’s quicker and easier. Register for online transacting at www.nedgroupinvestments.co.za. Once registered you will be able to view balances, statements and complete withdrawals. No forms, no fuss. And don’t forget that you can transact with us via phone or email too.
#6 Test your limits
All our fund ratings were re-affirmed on 1 April 2020 and the funds have grown over the past few years. If your investment limits were set years back, based on smaller fund values you may be able to increase these now. Remember, our funds should not be included in Nedbank’s limit, but should have their own limit as exposure of the funds is to an array of issuers – mainly big 4 South African banks.
#7 Reflect on your (cash) strategy
How much of your cash balance is strategic versus working capital? If there is a portion that you don’t need same day liquidity on, it could be generating some extra income in our Cash Solutions Range, with only 24 hours’ notice. Remember nothing in life is free. You pay for same day liquidity via a lower yield. So, if you don’t require same day liquidity why sacrifice the yield - especially if you can plan one day ahead which is not too hard.
#8 Have a laugh
Update your and your team’s details with us to ensure the correct people are receiving our daily rates (and our daily joke!).
#9 Keep learning
Research comparative funds. A tip: make sure to review the full list of holdings, especially the “tail” (smaller holdings) and the ranking of paper funds held with big banks. Not all bank paper is equal.
#10 Maximise the benefits
Compare fund yields to call rates and rates offered by other income providers to make sure you are receiving the best combination of yield and liquidity possible. The aim is to preserve your funds, with yield, liquidity and convenience. A tip: look for solutions that have a capital preservation mindset, diversification of counterparties, fixed deposit-type yields and call-account type access. Also, in liquidity, bigger is normally better.
And finally… Phone a friend
Call the Cash team. We would love to hear from you…