Purpose and Objectives
The purpose of this policy is to outline the way in which cash, in particular surplus operating cash funds, is managed and invested by our company.
Definitions, Terms, Acronyms
At Call – Cash funds that our company may, without penalty, obtain all amounts under the investment:
- immediately upon providing notice to the entity in which the funds/investments are held; or
- within 30 days after the notice is given to the entity in which the funds/investments are held.
Procedures Scope/Coverage
This policy applies to the general cash management practices of our company. In particular, they address the manner in which surplus operating funds can be invested so as to maximise return.
The management of expense payment reimbursements, petty cash and cashier operations are not within the scope of these procedures.
Procedures Statement
Our company must ensure that there is sufficient liquidity in its cash investments so that cash is available to meet both planned and unforeseen requirements, and to maximise the return on funds commensurate with a conservative cash management strategy. The controls developed within this policy acknowledge the conservative environment within which our company operates, and the restrictions imposed by the Law.
Cash Management
General provisions
Surplus operating funds may be invested in accordance with existing laws so as to maximise return on funds.
Investment of surplus operating funds is the responsibility of the CFO.
An appropriate level of liquidity will be maintained so as to ensure funds are available to cover the payment of all expenses on any given day.
Available and at-call cash reserves
Our company’s cash reserves, comprising a combination of cash and/or available drawdown facilities, should not fall below $50000.
Available and at call cash reserves shall not fall below $30000.
Cash flow management
A rolling, Cash Flow Forecast will be maintained. It is expected that a rolling monthly Cash Flow Forecast will be maintained for the next five to ten years.
Approved cash investments
Funds may be invested with multiple institutions; however investments must be made in accordance with counter-party limits specified within this policy.
Approved cash management instruments include:
- deposits with registered banks;
- negotiable instruments;
- term deposits with registered banks;
- accredited cash management funds.
The use of interest rate options on cash balances is not permitted.
Maturity profile
The maturity profile of cash investments will be based on the operating cash requirements of our company as defined by the Cash Flow Forecast.
The value of investments maturing on a single day cannot exceed 20% of the total portfolio value, except when funds are required to match known commitments on the day.
Investments beyond twelve months must not exceed 20% of the portfolio. Any proposal to invest funds for a period exceeding twelve months must be approved by the Chief Financial Officer.
Counter-party transactions and limits
Our company may buy and sell financial securities via registered banks and fixed interest brokers.
Our company is prohibited from dealing with brokers as a principle i.e. our company is not allowed to accept a broker’s cheque, however, a broker settling with a bank cheque is permissible.
Appropriate records of all securities transactions will be maintained by the Finance Unit.
All transactions will be made in the name of our company.