PO10 – MANAGE AND CONTROL WORKING CAPITAL
Description
You manage cash and working capital effectively using
appropriate technology, planning for any shortfall or surplus
including receivables, payables and inventories.
Elements
a Source short-term finance to improve organisational liquidity.
b Analyse and plan appropriate levels of cash and working capital.
c Prepare and monitor organisational cash flow, credit facilities and advise on appropriate actions.
d Contribute to the way current systems for managing cash, short-term liquidity and working capital
operate.
e Operate and comply with controls and safeguards over working capital management.
Every organization needs a balance of profitability and liquidity. Cash flow management is very
important to the success of any organization. Availability of cash in all its forms enables the organization
to meet its day to day obligations. I was once attached to the accounts department before audit
departments. One of the tasks was to ensure that there was enough working capital to meet the
obligations when they are due. I maintained this through maintaining minimum float balance in the
banks as well as tight controls in the budgets. Once I reached a minimum balance at the bank which I
pegged and seconded by management, no payment was done until there more funds.
On improving working capital effectively ,I recommended the hospital to be registered on health 263
an online platform to raise a bill and send the invoice to medical aids and this resulted in efficiency in
receiving funds within 2 weeks increasing liquidity of the organization. This reduced debtors with
significant percentage as now everything is being done online as compared to previous periods.
Also on stocking drugs and sundries, I advised management to have an agreement with suppliers that
they supply the drugs on credit and we would pay at a later stage once the drugs have been consumed
by patients. This helped to have more working capital as only suppliers would be paid after the
customers have used the drugs and sundries.
One of my tasks was to source working capital for the organization. This would entail sourcing short-
term loans from various Financial Institutions. This would entail analyzing the Cash inflow forecasts that
is liaising with the Accounts Receivable Department for possible Debtors Payments and sales
Department for Potential Cash Sales. An analysis for Cash Outflows would be done liaising with the
Accounts Payables Department for potential cash outflows be it paying Creditors or any Cash payments
that would accrue to the organization.
Once the cash requirements are established, I would then engage the Accounts Relationship Managers’
from our bankers. An analysis would be done on all the Possible Funding Options. The options will be
ranked considering the amount available, the interest rate and the maturity level. An option will then be
chosen that’s favorable to the organization. Once the option is Selected, I would then prepare the
paperwork which includes the facility letters that would need the authorization of the loan from the
Management. Once the facility has been granted and issued, I would make sure that the cash flow plans
would be followed and that the funds would be directed to the intended purposes to avoid
misappropriation of funds. Another key task was to make sure compliance with the credit terms of the
granted facility and ensure also the repayment of that loan. This would ensure continued relationship
with the bank.
