University of Toronto University of Toronto – Cash Management– Cash Management

CAUBO June 2006CAUBO June 2006

By Helen ChoyBy Helen Choy416-978-2981416-978-2981Helen.choy@utoronto.caHelen.choy@utoronto.ca

Student fees

Student fees for self-funded programs,

Sales of Goods & Services, Research Grant Contracts

Cash Inflows

Anybank

Clearingbank

GeneralBank

Account

MasterCard

Account

Provincial Operating Grants & Investment income

TrustBank

Account

Research Grants(Wires)

Donations

USD Account

Cash-in-action

Short-Term

CurrentAccount

PayrollExpenditure

Account

GeneralBank

Account

Cash Outflows

MastercardAccount

Suppliers, affiliates,

research partners,taxing bodies

Individuals(net pay)

ForeignDrafts

Imprest& PettyCash

Investment By UTAM(Longer-

Term)

$US Account

The beginning…The beginning…

• UTAM formed in April 2000 UTAM formed in April 2000 • Cash management transferred to Cash management transferred to

Financial Services Dept.Financial Services Dept.• Assessment & more understanding Assessment & more understanding • Hired help (3 months) for data Hired help (3 months) for data

gatheringgathering• Used downloads from financial Used downloads from financial

systems, investments & banking systems, investments & banking reports and spreadsheetsreports and spreadsheets

Sources of Cash Receipts (Excludes External Borrowing) Fiscal Year 2001-02 (in millions)

-40

10

60

110

160

210

May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02

Gov't Grants Other Deposits Student Fees

Donations Research Grants (Wires) EFIP Short-term Income

LTCAP Distribution

Fiscal Year 2001-02 (in millions)

0

20

40

60

80

100

120

140

160

May-01 J un-01 J ul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 J an-02 Feb-02 Mar-02 Apr-02

Payroll & Income Tax AP Construction & Building LTCAP Investments

Total Cash Receipts by Year(in millions)

50

70

90

110

130

150

170

190

210

230

May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr

1999-2000 2000-01 2001-02

LTD Assets $27.3 million

Donations: $53.9 million, Fees: +$18.0 million

SuperBuild: $68.5 million.

Expendable Funds Average Monthly Balances(millions of dollars)

$0.0

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

$700.0

1996-97 323.2 300.6 273.9 266.1 318.5 339.6 334.3 317.0 335.4 316.5 303.1 313.5

1997-98 298.4 292.4 279.7 266.4 322.0 330.8 320.3 306.7 324.5 316.4 305.9 304.6

1998-99 323.8 310.2 298.1 279.6 324.9 353.3 343.4 349.2 354.6 335.5 320.2 348.3

1999-00 361.9 350.3 335.2 323.5 410.0 424.8 428.7 397.6 412.5 396.1 377.0 456.6

2000-01 488.1 479.9 459.7 453.0 538.3 560.7 551.2 526.5 518.3 506.9 455.0 506.8

2001-02 538.3 532.6 500.8 488.3 638.1 618.2 604.6 574.6 514.0 476.8 456.4 468.7

May June July Aug Sept Oct Nov Dec Jan Feb Mar April

Now that we know Now that we know more…more… Identified patternsIdentified patterns Identified cash volume & timingIdentified cash volume & timing Consider impact of major Consider impact of major

upcoming cash flow changesupcoming cash flow changes How to best perform cash How to best perform cash

management?management? What tools to use?What tools to use?

Objective of Cash Objective of Cash ManagementManagement Maximize funds available for Maximize funds available for

investing investing Accurate and timely information Accurate and timely information

for budgeting and forecasting for budgeting and forecasting Accurate and timely information Accurate and timely information

for borrowing and internal for borrowing and internal lending lending

Accurate and timely forecast of Accurate and timely forecast of capital available for investmentcapital available for investment

Functions and reportsFunctions and reports

Daily cash requirements & transfersDaily cash requirements & transfers Monthly forecast for next 3 monthsMonthly forecast for next 3 months Monthly forecast for the fiscal yearMonthly forecast for the fiscal year Annual long-range budgets - multi-Annual long-range budgets - multi-

yearyear Other cashflow-related analysis and Other cashflow-related analysis and

reportsreports

How…How…

Worked closely with other areas Worked closely with other areas with information affecting cash with information affecting cash inflow & outflowinflow & outflow

Used downloads from system & Used downloads from system & spreadsheets to summarize & spreadsheets to summarize & reportreport

Expanded the existing daily Expanded the existing daily cashflow spreadsheetcashflow spreadsheet

Mon Tue Wed ThuDate 20-Mar-06 21-Mar-06 22-Mar-06 23-Mar-06

OPENING BALANCE General bank balance 143 223 164 244 Trust bank balance 263 587 794 96General and Trust Bank Balance-Monthly Average

Subtotal 406 810 958 340

RECEIPTS Cashiers/Other Dept Deposits 1,994 4,826 2,658 1,440 Student fees 264 315 359 269 Government grants Prov of ont Ministry of Health Donation 58 10 70 36 Research thru wire - General 275 778 CDA Foundation Innovation P. Ont. 07Grant/98 147 20Other - LTCAP Inc DistnLong Term Borrowing PoolOther - Endowment Stewardship FeeOther - Management Overhead FeeOther - UTAM Management FeeOther - UTAM rebalancingOther - General 343 226 285 225Total Receipts 3,081 6,155 3,392 1,970

Mon Tue Wed ThuDate 20-Mar-06 21-Mar-06 22-Mar-06 23-Mar-06

DISBURSEMENTSPayrollTransfer to Current bank a/c 2,300 5,700 2,100 2,400Income Tax - Trnsf to Current bank a/cGST RefundWire transfer payment 329 0 Hydro/Gas US drafts 302 Purchase US Dollars Benefits (Green Shield/Minstry of Finance EHU chqs) Transfer to Pension Plan Other Wires BMO Purchase cards (General a/c) UTAM Quarterly Advance (General a/c)Long Term Borr PoolTransfer to LTCAPTransfer to LTCAP from LTBPOther - Mortgage & Loan PaymentsOther - UTAM rebalancingOther - General 48 5 10 2Total Disbursements 2,677 6,007 2,110 2,402

Net inflows/(outflows) 404 148 1,282 (432)

Mon Tue Wed ThuDate 20-Mar-06 21-Mar-06 22-Mar-06 23-Mar-06

CLOSING BALANCE BEFORE UBS TRF 810 958 2,240 (92)Transfer from(to) UBS Cash in Action 0 0 (1,900) 200CLOSING BALANCE AFTER UBS TRF 810 958 340 108

Opening Balance UBS (Cash in Action) 51,694 51,694 51,694 53,594Transfer from(to) U of T Bank Account 0 0 1,900 (200)Transfer in UBS Cash in Action Investment IncomeUTAM RebalancingClosing Balance UBS (Cash in Action) 51,694 51,694 53,594 53,394UBS Average Daily Balance for the month

Opening Balance (Current Expen. Acc.) 722 1,387 1,568 1,426 Transfer in 2,629 6,009 2,100 2,800 Actual / Estimated Cheques Cashed (1,964) (5,828) (2,242) (3,772) Closing Balance 1,387 1,568 1,426 454

Opening Balance (in US $000) 1,196 1,173 1,128 1,056 Purchase US Dollars - - - - Deposits 34 81 10 77 DonationsNet Wire Debit/Credit (57) (126) (82) (76) Closing Balance 1,173 1,128 1,056 1,057

How…How…

Detailed forecast of Provincial Grants:Detailed forecast of Provincial Grants:– Gathered historical data & budgets Gathered historical data & budgets – monitored receipts by program & datesmonitored receipts by program & dates– Revised with new informationRevised with new information

Detailed forecast of Research wire Detailed forecast of Research wire deposits:deposits:– Gathered historical data & awards Gathered historical data & awards

informationinformation– Monitored receipts by sponsor & datesMonitored receipts by sponsor & dates– Revised with new informationRevised with new information

How…How…

Detailed forecast of payments:Detailed forecast of payments:– Classified cheques over $50K by Classified cheques over $50K by

major categories, by month issued major categories, by month issued and by month cashed.and by month cashed.

– Tabulated amounts for cheques Tabulated amounts for cheques under $50K by issued and cashed under $50K by issued and cashed date.date.

– Daily estimate of cheques to be Daily estimate of cheques to be cashed – over and under $50Kcashed – over and under $50K

How…How…

Other:Other:– Modelled and analyzed the impact Modelled and analyzed the impact

of changes in major cashflowsof changes in major cashflows– Continued updating historical data Continued updating historical data

and graphing cashflowsand graphing cashflows– Prepared daily cashflow balances Prepared daily cashflow balances

and compared to monthly and compared to monthly averages averages

Monthly Average Market Value of EFIP Compared to Monthly Highs and Monthly Lows (in millions)

100

200

300

400

500

600

700

May-02

Jul-02

Sep

-02

No

v-02

Jan-03

Mar-03

May-03

Jul-03

Sep

-03

No

v-03

Jan-04

Mar-04

May-04

Jul-04

Sep

-04

No

v-04

Jan-05

Mar-05

May-05

Jul-05

Sep

-05

No

v-05

Jan-06

Mar-06

Average Monthly Balances Highest Balance for the month Lowest Balance for the month

BenefitsBenefits

Reduced amounts kept in our bank Reduced amounts kept in our bank accounts without incurring accounts without incurring overdraft charges, hence kept overdraft charges, hence kept more funds investedmore funds invested

Better estimate of amounts Better estimate of amounts available for investing (budgets available for investing (budgets and forecast)and forecast)

Assisted in decisions on internal Assisted in decisions on internal lending and external borrowinglending and external borrowing

Time spentTime spent

Daily cash management: 0.25 FTEDaily cash management: 0.25 FTE Gathering and updating and Gathering and updating and

reporting of related information: reporting of related information: 0.3 FTE0.3 FTE

Monthly forecast and annual Monthly forecast and annual budget: 0.2 FTEbudget: 0.2 FTE