The Importance of Operating and Intermediate Cash Management Target Policies [SUBSCRIBERS-ONLY]

Establishing operating and intermediate cash management target policies will provide many benefits. This simple but often overlooked cash management best practice will augment internal accounting controls, boost cash management awareness, and enhance perceptions that nonprofit organization management systems are significant and robust.

I am surprised by how many nonprofit organizations have not established cash management target policies. Establishing a formal bucket (stratification) system for all cash fund categories is a must.

Bucketing begins with considering minimum, maximum, and target parameters for operating (short-term) and intermediate cash funds. These two buckets must be established before consideration of other cash management buckets for investment (long-term) and other special purpose, Board-designated cash funds.