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Unit 10: Cash Management

Making change is a huge part of any store’s day-to-day activities. New technology is arriving in Notes
convenience stores that allow bulk coin and note dispensing. This system allows a cashier
starting his shift to get all of the change he needs with just a couple of keystrokes. The other
component of an effective cash management system is giving clerks the ability to drop money
immediately, and then retrieve additional funds if they should need it. “The new equipment has
just made cash drops easier, better and faster,” It aids in creating deposits and those kinds of
things.
In this unit, we will discuss cash management and budgeting. We will also focus on day to day
cash management and e-tailing.

10.1 Budgeting

Planning Long reliant on a maze of disconnected spreadsheets and manual processes, capital
expense planning has historically been a thorn in the sides of organizations large and small—
the problems of incorporating multiple areas of expertise and a large degree of inherent risk
leading the best-intentioned projects to go wildly off plan. With today’s emerging software
solutions, however, this doesn’t have to be the case. Building on the capabilities of Web-based
budgeting and forecasting applications, these solutions combine the specialized functionality
required for capital expenditure planning with guided workflow and process support to transform
the planning of capital expenditures into an accurate and reliable process.

10.1.1 Challenges of Budgeting for Capital Expenses

“Planning long-term projects is costly, and public sector organizations are often put off by the
difficulty of justifying the potentially high cost of aborting a project if it doesn’t progress. Thus,
planning and preparatory work are key. It’s surprising, however, how often organizations hurl
themselves into long-term projects and huge investments with the flimsiest of business cases.
The focus should be on getting it right the first time.”

—Glenn McCauley, Head of Private Finance Initiative Consulting
Deloitte Consulting Budgeting for capital expenses is a tricky business that involves uncertain
projections (and therefore a high degree of risk), dependence on a range of expertise, linking
long-term projections with financial plans, and stringent record keeping and reporting. The
following sections describe these challenges and some of the ways organizations are dealing
with them.
Capital budgeting (or investment appraisal): is the planning process used to determine whether
a firm’s long term investments such as new machinery, replacement machinery, new plants,
new products, and research and development projects are worth pursuing.

Coping with Uncertain Projections

Typically encompassing unusual activities that take organizations into uncharted waters, large-
scale capital expenditures don’t conform to “normal” budgeting routines. Instead, they often
require special funding and attract high levels of risk, which in turn necessitate board-level
consideration and approval. This is because the issues entailed in designing and constructing
major assets, such as new production processes, construction projects, and scientific endeavours,
differ markedly from those considered in the acquisition of rebuilt assets. Indeed, capital
expenditure projects are distinguished by their significant scale, multiyear time frames, and
overall complexity—all factors that make modeling and planning capital expenditure budgets
subject to significant uncertainty.

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