Every facility needs a cash management procedures manual - Treasury Management

Healthcare Financial Management, Oct, 1991 by Leslie N. Masonson

Most financial managers work without a written cash management procedures manual. For the minority who have such an instrument, the manual likely is incomplete or out-of-date, rendering it useless. An up-of-data, detailed, well-written manual is critical to a well-run financial department and can provide an opportunity to streamline operations and improve productivity.

Unfortunately, developing a cash management manual takes considerable time, and most financial managers place other day-to-day priorities ahead of the task. For a number of reasons, that viewpoint can be a mistake.

In these litigious times, written procedures may provide the only proof that a healthcare facility is in legal compliance with specific regulations and laws. A facility's internal and external auditors, board of directors, and chief financial officer (CFO) also may need documentation in case of questionable practices or errors involving large sums of money.

When a critical financial staff member, such as a cash management associate or supervisor, is absent or on vacation, other staff members can complete that day's cash management activity without panicking if a manual is available. Certainly, to ensure consistent accuracy and quality, a newly hired staff member would appreciate a written document indicating each step of whatever process he or she must perform.

In the rare circumstance that a staff member unexpected resigns or is fired for serious wrongdoing, a manual also describes necessary procedures for a temporary backup worker. Unfortunately, most individuals retain their daily work procedures in their heads.

When changes to internal systems and accounting procedures affecting cash management are made, the manual should be reviewed and updated.

Step-by-step approach. To prepare a comprehensive manual, a facility's CFO or senior financial manager should take the following steps:

* Select an internal person (such as an experienced cash management staffer, an internal auditor, or a systems or methods person) or an outside cash management consultant to take responsibility for the project;

* Arrange for the coordinator to meet with cash management employees to review each person's job responsibilities and insights. This information provides background for the more detailed discussions to follow;

* Interview each individual, including the cash management supervisor, to cover daily routines in detail (such as steps performed, forms and reports used, internal and external information obtained, and interaction with other individuals and other departments);

* Interview people from other departments to determine how they deal with the cash management office by phone, memo, or printed computer reports. Pinpoint the exact information sent back and forth, its purpose and usefulness, and deadlines;

* Develop a standard flow chart for each cash management job function, indicating all steps, inputs and outputs, timing of events, and examples of reports that are completely filled;

* Improve productivity while creating flow chart procedures. Ask questions concerning each step and try to streamline the process and improve productivity. Eliminate redundant steps and reports, automade certain steps using personal computers, and look for ways to save time and combine tasks;

* Review the accuracy of flow charts with the person who provided the information and that person's supervisor. Correct any errors or misunderstandings;

* Test the usefulness and completeness of each procedure in the manual. Ask another individual not related to the cash management function to perform the functions and procedures as described for one day. Change or enhance any instructions that are not clear;

* Once procedures have been prepared for each job function, obtain written approvals from the CFO and internal audit department. Procedures then should be given to each person according to his or her area of responsibility. The entire procedures manual and any diskettes containing the information should be kept locked up to prevent unauthorized use; and

* Update the procedures manual each year. The optimal time to do this is before each person's annual review. Updates should be added to each person's job responsibilities.

Start now. A comprehensive cash management procedures manual is a vital document that is needed by every healthcare facility. It is all too easy to avoid the process by claiming that a manual is superfluous. A shrewd cash manager will begin the process today, before it is too late. After all, as Cardina Richard Cushing once said, "It wasn't raining when Noah built the ark."

Leslie N. Masonson, CCM, is president of Cash Management Resources, a cash management consulting and training firm in Monroe, N.Y.., and the author of Cash, Cash, Cash: The Three Principles of Business Survival and Success. Readers' comments and suggestions for future columns are encouraged and can be addressed to Leslie N. Masonson, CCM, Cash Management Resources, 20 McGarrah Road, Monroe, NY 10950.