Cash Management Procedures

Document Type: Procedure
Version: 1.0
Last Updated: February 2026
Distribute To: CFO, Controller, Accounting Staff

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Purpose

Establish procedures for managing daily cash operations to ensure adequate liquidity, minimize costs, and protect company assets.

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Why Cash Management Matters

Construction Cash Challenges:

• Long billing cycles (30-45+ days)
• Retainage withheld (5-10%)
• Front-loaded costs (mobilization, materials)
• Seasonal fluctuations
• Single project can cause cash crisis

Effective Cash Management Enables:

• Meeting payroll consistently
• Capturing early pay discounts
• Avoiding line of credit fees
• Taking advantage of opportunities
• Sleeping at night

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Daily Cash Operations

Morning Cash Position Review:

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         DAILY CASH POSITION
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Date: _______________  Prepared by: _______________

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CASH BALANCES:

| Account | Ledger Balance | Available Balance |
|---------|----------------|-------------------|
| Operating checking | | |
| Payroll account | | |
| Money market | | |
| Other: _________ | | |
| TOTAL | | |

Outstanding deposits in transit: $________________
Outstanding checks: $________________

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TODAY'S EXPECTED ACTIVITY:

Expected receipts:
| Source | Amount | Confidence |
|--------|--------|------------|
|        |        | ☐ High ☐ Med ☐ Low |
|        |        | ☐ High ☐ Med ☐ Low |
| TOTAL  |        |

Expected disbursements:
| Payment | Amount | Status |
|---------|--------|--------|
|         |        | ☐ Must pay ☐ Can defer |
|         |        | ☐ Must pay ☐ Can defer |
| TOTAL   |        |

Net expected change: $________________

Projected end-of-day balance: $________________

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LINE OF CREDIT:

Limit: $________________
Current balance: $________________
Available: $________________

Action needed: ☐ None  ☐ Draw  ☐ Pay down

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Daily Disciplines:

Time	Activity
8:00 AM	Review overnight deposits and transactions
8:30 AM	Update cash position report
9:00 AM	Review expected receipts/disbursements
10:00 AM	Make deposit of previous day's receipts
2:00 PM	Process approved disbursements
4:00 PM	Final review of day's activity

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Cash Receipts

Receipt Processing Procedures:

Mail Opening:

1. Two people open mail (or use lockbox)
2. Log all checks immediately
3. Restrictively endorse: "For Deposit Only - [Company Name]"
4. Photocopy or scan all checks
5. Secure checks until deposit

Receipt Log:

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         DAILY RECEIPT LOG
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Date: _______________

| Receipt # | Customer | Check # | Amount | Project | Deposit # |
|-----------|----------|---------|--------|---------|-----------|
|           |          |         |        |         |           |
|           |          |         |        |         |           |

TOTAL: $________________

Prepared by: _______________
Deposited by: _______________

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Deposit Procedures:

• Deposit intact (don't use checks to pay vendors)
• Deposit same day received
• Keep deposit receipt with log
• Reconcile deposit to receipt log

Electronic Receipts:

ACH/Wire Receipts:

• Review bank activity for incoming wires
• Match to expected receipts
• Record same day received
• Follow up on expected payments not received

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Cash Disbursements

Payment Processing:

Daily Payment Run:

1. Review invoices due
2. Verify 3-way match (PO, receipt, invoice)
3. Check cash position
4. Prioritize payments
5. Process approved items

Payment Prioritization:

Priority	Category	Examples
1	Legal/regulatory	Payroll taxes, insurance
2	Operations critical	Payroll, certified payroll
3	Relationship critical	Key subs, loyal vendors
4	Terms-driven	Early pay discounts
5	Standard	Regular vendor payments
6	Deferrable	Discretionary expenses

Check Controls:

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         CHECK PROCESSING CONTROLS
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☐ Blank check stock secured (locked)
☐ Check stock inventory logged
☐ Signature authorities current
☐ Dual signature required above $___________
☐ Positive pay file transmitted to bank
☐ Void checks defaced and retained
☐ Check log maintained

Missing check review:
| Check # | Status |
|---------|--------|
|         |        |

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ACH/Wire Transfers:

Wire Transfer Procedures:

1. Request form completed with details
2. First approval by requester's manager
3. Second approval by authorized signer
4. Bank verification call (for new payees)
5. Confirmation retained

ACH Payment Procedures:

• Maintain approved vendor ACH list
• Verify banking info before first payment
• Review ACH file before transmission
• Confirm successful transmission

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Line of Credit Management

Draw Procedures:

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         LINE OF CREDIT DRAW REQUEST
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Date: _______________

Current available balance: $________________
Requested draw amount: $________________

Purpose:
☐ Cover accounts payable
☐ Fund payroll
☐ Bridge receivables
☐ Other: _______________________________________________

Expected repayment date: _______________
Source of repayment: _______________________________________________

Requested by: _______________________________________________
Approved by: _______________________________________________

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Best Practices:

Do	Don't
Draw before you're desperate	Wait until last minute
Pay down when cash available	Use as permanent capital
Keep some capacity in reserve	Max out routinely
Track cost of borrowing	Ignore interest expense

Monthly LOC Analysis:

Average daily balance: $________________
Interest paid: $________________
Effective rate: _____%
Peak balance: $________________
Days at peak: _____

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Cash Concentration

For Multiple Accounts:

Daily Concentration:

1. Review balances in all accounts
2. Transfer excess to concentration account
3. Fund operating accounts as needed
4. Maintain minimum balances

Target Balances:

Account	Purpose	Target Balance	Action if Above	Action if Below
Operating	Daily operations	$_____	Sweep to MM	Transfer from MM
Payroll	Payroll funding	$_____	Sweep to MM	Fund before payroll
Money market	Earn interest	Excess	N/A	Draw if needed

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Fraud Prevention

Cash Controls Checklist:

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         CASH CONTROLS CHECKLIST
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PHYSICAL CONTROLS:
☐ Check stock locked
☐ Cash receipts secured
☐ Dual custody for large amounts
☐ Bank statements to owner/CFO first

SEGREGATION OF DUTIES:
☐ Different people for:
    - Receiving cash
    - Recording deposits
    - Making deposits
    - Reconciling bank

ELECTRONIC CONTROLS:
☐ Positive pay enrolled
☐ ACH debit blocks
☐ Online banking alerts
☐ Dual authorization for wires

MONITORING:
☐ Daily cash position review
☐ Monthly bank reconciliation
☐ Unexpected variance investigation

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Positive Pay:

Item	Status
Enrolled	☐ Yes ☐ No
Daily file transmission	☐ Yes ☐ No
Exception review	☐ Yes ☐ No

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Banking Relationships

Optimize Banking Services:

Review Annually:

• Account analysis statement
• Service charges
• Compensating balance requirements
• Interest rates (loans and deposits)
• Online banking capabilities

Negotiate:

• Earnings credit rate
• Service charge caps
• Minimum balance requirements
• Line of credit terms

Bank Account Structure:

Account	Purpose	Bank	Primary Contact
Operating	Daily operations
Payroll	Fund payrolls
Savings/MM	Excess cash
Line of credit	Working capital

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Float Management

Understanding Float:

Collection Float = Time from receipt → Available in bank
Disbursement Float = Time from check written → Clears bank

Net Float = Disbursement Float - Collection Float

Positive Net Float = Benefit (use the money longer)
Negative Net Float = Cost (money tied up)

Strategies:

Accelerate Collections:

• Electronic payments (ACH/wire)
• Lockbox services
• Same-day deposit
• Remote deposit capture

Optimize Disbursements:

• Pay on due date (not before)
• Use ACH for predictable timing
• Avoid rush check requests

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Cash Flow Calendar

Monthly Cash Rhythm:

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         MONTHLY CASH CALENDAR
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Week 1:
☐ Review prior month close
☐ Update cash forecast
☐ Prepare billings
☐ Follow up on past due AR

Week 2:
☐ Process payroll (bi-weekly)
☐ Major vendor payments
☐ Subcontractor pay apps due

Week 3:
☐ Mid-month billing (if applicable)
☐ Review AR aging
☐ Cash position assessment

Week 4:
☐ Month-end close preparation
☐ Process payroll
☐ Quarter-end items (Q1, Q2, Q3, Q4)
☐ Monthly reporting

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Key Dates:

Date	Item	Cash Impact
1st	Rent due	Outflow
5th	Payroll	Outflow
10th	Payroll taxes	Outflow
15th	Insurance payment	Outflow
20th	Payroll	Outflow
25th	Sub payments	Outflow
End	Client billings	Future inflow

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Reporting

Weekly Cash Report:

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         WEEKLY CASH SUMMARY
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Week Ending: _______________

Beginning cash: $________________
Total receipts: $________________
Total disbursements: $________________
Net change: $________________
Ending cash: $________________

LOC activity:
  Draws: $________________
  Payments: $________________
  Ending balance: $________________

Total liquidity: $________________

Compared to forecast:
  Actual: $________________
  Forecast: $________________
  Variance: $________________

Key items for next week:
___________________________________________________________

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Related Documents

• Cash Flow Forecasting
• Banking Covenant Compliance
• Accounts Receivable Procedures
• Accounts Payable Procedures

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