Profit on paper, pressure in the bank account
A large forward sale may raise the profit and not provide cash to pay the supplier. Therefore, management needs to follow accruals, actual collections and planned payments, not the income statement alone. Link liquidity forecasting to realistic deadlines and responsible follow-up.
A clear policy for each treasury
Assign responsibilities, disbursement limits and required documents, and record the transfer between vaults as a linked transaction. Do not use an expense to explain the outflow of cash to another treasury; This doubles the expense and misleads the report.
- Cash inventory and daily or periodic reconciliation.
- Approval of payments according to validity limits.
- Assign collection to the customer and the correct document.
- Match transfers and bank without duplication.
Example: Collection of a representative that was not delivered to the fund
Management should see the collection value and its delivery status and reconcile it with invoices, instead of waiting for a manual report. Test the Redline cycle and treasury in the shared domain, and separate the collection record authority from the final settlement approval.
Predict liquidity with an updateable plan
Use an accruals schedule and then add a realistic expectation of collection, team salaries and necessary purchases. Review the variances weekly and adjust the plan. RedERP links treasury to accounts and operations, while adopting forecasting and financial responsibility remains a management decision.
