Cash Management

Policy:Cash Management
Effective:October 12, 2009
Source:Board of Trustees
Purpose:To establish sound cash management practices to ensure efficient utilization of cash in a manner consistent with the overall strategic goals of the College


The Vice President for Finance and Business (VPFB) shall establish a cash management and investment program for institutional funds. The VPFB may designate the Controller to be responsible for the day-to-day activities and functions of the program. The Controller shall manage both daily cash flow and short-term investments.

Investment Goals

Efficient cash management strategies, techniques, and procedures shall be used to increase the productivity of cash flows while achieving the following objectives:

  • Liquidity – maintaining the ability to pay obligations when they become due.
  • Cash Optimization – establishing systems and procedures that help minimize investment in non-earning cash resources while providing adequate liquidity.
  • Financing – obtaining both short- and long-term borrowed funds in a timely manner at an acceptable cost.
  • Financial Risk Management – monitoring and assisting in the control of the College’s exposure to interest rates, foreign exchange, and other financial risks.
  • Coordination – ensuring that cash management goals are communicated and integrated with the strategic objectives and policy decisions of other areas of the College that have an impact on cash flows.

General Guidelines

  1. All activity and balances in the primary accounts shall be monitored by the Business Office to assess the cash necessary to meet daily obligations and ensure adequate funds are available.
  2. The Controller is responsible for the movement of funds between bank accounts maintained by the College. This includes, but is not limited to:
    • Initiating all wire transfer of funds for general business purposes of the College.
    • Establishing the daily cash position of the College.
    • Appropriately funding disbursement accounts for College obligations.
    • Moving depository funds for investment purposes of the College.

Cash Accounts

  1. The College’s available cash is divided into three parts:
    • Collection and Disbursement Account: The College maintains an amount of cash in its general collection and disbursement accounts sufficient to meet its outstanding obligations.
    • Short-term Account: The majority of the College’s cash balance available for investment is maintained in the cash and liquidity accounts. These accounts will be managed and invested by investment managers, selected by the VPFB consulting with the College’s investment advisors, in order to maximize the return to the College while, at the same time, providing for safety of principal and sufficient liquidity for the College to meet its cash needs. The College will manage its short-term (12- to 18-month) investments to ensure sufficient liquidity and prevent their premature sale for the purpose of covering expenditures. Short-term investments should mature at face value in sufficient amounts to meet any needs.
    • Intermediate-term Account: To the extent cash is not expected to be needed on short notice, the VPFB will direct the funding of a third part. This fund shall be managed and invested by an investment manager or managers, selected by the VPFB consulting with the College’s investment advisors, in order to maximize the return on said money to the College while providing for the safety of principal. The College will manage its intermediate investments to ensure they are made under circumstances and in amounts in which the College would not be forced to liquidate them at a loss.
  2. The objectives and maturity restrictions for each of the investable account types are
    outlined below.
    1. Collection and Disbursement Account
      • Investment Objectives: The funds in the Collection and Disbursement Account must be available to support College programs and activities. Since the amount of assets available for investment will fluctuate, the investment program adopted must allow the College to meet both anticipated and unanticipated cash demands. The primary objective of this account is, therefore, to be invested so as to provide sufficient liquidity to meet the College’s needs for funds as they arise. (In this respect, liquidity is defined as the ability to realize, when required, the amount originally invested).
      • Maturity Restrictions: The maximum maturity for any investment at the time of purchase for the Collection and Disbursement Account shall be one year.
      • To the extent funds are available, a minimum of two months’ operating contingency in cash and short-term investments (maturing one year or less) shall be maintained.
    2. Short-term Account
      • Investment Objectives: The primary investment objectives of the Shortterm Account are to maximize yield, maintain liquidity, and to maintain safety of principal. In the event a cash withdrawal is necessary, the investment manager will be given as much advance notification as possible.
      • Maturity Restrictions: The maximum maturity for any investment at the time of purchase for the Short-term Account shall be two years.
    3. Intermediate-term Account
      • Investment Objectives: The Intermediate-term Account has been established to provide funding over an intermediate horizon. The primary investment objectives, therefore, are to maximize yield and maintain safety of principal during the investment period.
      • Maturity Restrictions: The maximum maturity for any investment at the time of purchase for the Intermediate-term Account shall be ten years.

Portfolio Management and Balance*

Allowable investments include (to be determined consistent with expectant use):

  1. U.S. Treasury Bills, Notes, Bonds.
  2. U.S. Government Agency Securities.
  3. Repurchase Agreements with select Primary Government Dealers.
    • U.S. Treasury or Government Agency collateral is required to be marked to market at 102% of the Repo Value.
    • Collateral is to be held by the custodian.
  4. Commercial Paper & Time Deposits with a minimum rating of A1 by Standard & Poor’s and P1 by Moody’s.
  5. Corporate Notes with a minimum rating of A3/A-.
  6. Money Market Funds managed by Schwab or other reputable agents.


The Manager will maintain prudent diversification across instruments, and specific issuers. Maximum exposure to any one issuer shall not exceed 5% at the time of purchase. The following do not apply: Repurchase Agreements; Money Market Funds; U.S. Treasuries; and U.S. Government Agencies.

*Does not include Collection and Disbursement Account

Approved by The Board of Trustees
October 2009