Cash Management Toolkit

November 27, 2012

This Cash Management Toolkit is part of a suite of practitioner guides and tools developed by Women’s World Banking for use by microfinance institutions (MFIs). It integrates closely with the Tool for Developing a Financial Risk Management Policy (Women’s World Banking, 2005) and expands on the fundamental guidance regarding liquidity risk management provided there. Cash Management includes all activities related to the efficient planning, procurement, investment and control of cash in a financial institution.

Cash by its nature is risky and costly. More than any other asset, cash is exposed to fraud, theft and accidental loss. At the same time, cash does not earn a financial return and it requires resources for protecting and controlling it. The analysis of cash must therefore always be two-dimensional and consider aspects of control and risk mitigation alongside the questions of efficiency and cost management.

This toolkit is about managing cash: be it in the form of physical bills in the safe or in the care of field staff, in the form of balances held at other banks, or as liquid investments that can quickly be converted back to cash. For the purpose of the toolkit we define cash as immediately available and generally accepted means of payment, thus including both physical bills and coins, so-called vault cash, as well as deposits with banks. Most banking textbooks give very little room to the management of vault cash. This is very different in microfinance where clients are often compelled to transact in cash. MFIs must therefore find ways to safely and efficiently handle a much higher proportion of their business in vault cash than traditional banksDownload the English VersionDownload the Spanish Version