Designing a Treasury Cash Management System. Finance Case Study

Memo
To
The Corporate Treasurer
Subject: Corporate Management System
Company’s cash management system must be automated with advanced hardware and software to avoid any chances of errors and risk of fraud. Hardware system must include the following machines; before the customer enters the park, through which a card will be generated when they will insert the desired amount. Machines inside the park can recharge the amount in the cards so they can use the facilities as much as they want. Machines will charge the card every time they will use the services and amount will be deducted. Two of the major tools will be used to collect coins and collect notes with the sorting facility. All the cash will be gathered and deposited into bank on daily basis, report will be generated via system and will be sent to head office directly. Once the amount is deposited into the bank account, again report will be sent to the treasury department by the bank. Treasury Department will reconcile all the amount received from the bank and report generated through the note counter machine. Disbursement of the cash to account payable will also be transparent like cash collection. Every account payable will be recorded into the company’s system and before disbursing the check to the client it will be reconciled with the treasury team. All the transactions will be made via proper software’s like ERP or SAP to make every transaction transparent and free from risk and errors. The cash management tools like cash recycling, smart safe, banknotes, and coin counter will make the process effective and transparent for the company and the users. A single account cash management system must be develop worldwide for all the parks and resorts to avoid duplication, errors and risk.
Table of Contents TOC \o "1-3" \h \z \u Walt Disney - Parks and Resorts PAGEREF _Toc20681973 \h 3Cash Management System PAGEREF _Toc20681974 \h 3Cash Collection Process PAGEREF _Toc20681975 \h 4Recommendation PAGEREF _Toc20681976 \h 5Cash Disbursement Process PAGEREF _Toc20681977 \h 5Recommendation PAGEREF _Toc20681978 \h 6Bank and Cash Management PAGEREF _Toc20681979 \h 7Recommendation PAGEREF _Toc20681980 \h 7Tools for Cash Management PAGEREF _Toc20681981 \h 8Recommendation PAGEREF _Toc20681982 \h 9References PAGEREF _Toc20681983 \h 10
Walt Disney - Parks and Resorts
Walt Disney is one of the world’s largest media and Entertainment Corporation, it operates into five main segments; studio entertainment, media networks, consumer products, interactive media with parks and resorts. The segment parks and resorts have six vacation destinations with eleven theme parks and forty-four resorts in many countries of North America, Europe, and Asia. Parks and resorts segment mostly generate business from the sales of entries to the theme parks, food, beverages, vacation packages for resorts (includes night stay and cruises) and rent received from vacation club properties. Another revenue generation is via sponsorship, co-branding, real estate and royalties. Significant cost is incurred due to infrastructure, depreciation, and labor whereas, infrastructure includes information systems (Annual Report, 2018). In 2013, 55% of the park revenues are generated from the entry fee and 30% from food, beverages and other merchandises. As per the annual report of 2018, after media networks the largest amount of revenue is generated from Parks and resorts of $24,296 i.e. 34.14% (20,296/59,434*100) and segment operating income is 28% (4,469/15,706*100).
Cash Management System
Cash management is one of the key departments of any organization, it includes all the movement of the cash from customer collection to the bank. Systems are developed/designed on proper software’s which handles the transactions end to end. There are two main components of cash management system; hardware and software. Hardware system eliminates the manual count which reduces the chances of fraud and error. Another important thing it does is coin and banknote recycler in which it accepts the cash from cashier, tally the amount and sort the banknotes. The system helps to operate smooth transactions cooperate between customers, suppliers, organization and banks. In a research study, it was concluded that due to cash management system incorporated into organizations, money transactions and financial processes integrated with each other (evolution of global cash management system). The cash management system for parks and resorts requires counting at least through four stages; when cashier change the cash given by customer, amount is adjusted into software, when all the collected cash is safely kept into safe and when a cash deposit is made. Cash management activities include assistance with banking solutions for all the segments of the business. The cash management system between Motorola and Citibank has brought cash flows in line with all of the products offered worldwide. The author compares the results with the information systems incorporated in the company globally and with competitors (Holland, Lockett, Richard & Blackman, 1995). The company must be responsible for opening/closing of banks domestic and international accounts. Maintain and ensure accurate records in a centralized corporate bank – assistance of reporting
Cash Collection Process
Parks and resorts have the second most generated income and above 55% of the revenue is generated from the entry fee of parks. Cash collection process should be efficient along with the best hardware and software incorporated into the systems. Less human involvement will make work easy, efficient and reliable by installing machines. When a customer comes to enjoy the park facilities they must pay at the counter via cash and purchase a card. For example; there must be an entry fee to enter the park per person with segregation of adults and children. They must purchase cards for each person by putting banknote or coin into machine, they can recharge the card anytime within the park. Every individual will be the owner of their own card if any customer wants to enjoy any facility they can recharge the card via same machine which will be available everywhere in the park. Company manager along with security must gather the cash from the machines when park facilities are closed for public on daily basis. Every machine will generate a statement for all the transactions (cash paid and change returned to customers), which must tally with the actual cash. A hardware system will be generated to tally the cash notes and coins with the statement and report must be sent to treasury team at the head office. The same system must be implemented in all the parks worldwide and cash report must be sent to head office to keep the operations centralized.
Recommendation
Once all the automatic systems are incorporated into the parks resorts, there are still chances of risk and errors with regards to cash received and spent on a daily basis. According to the corporate treasury book, multinational must have a centralized cash system will make the transaction transparent and free of fraud. Centralized cash system will work best for the company, as it has almost five parks worldwide. To keep an updated on daily cash ...