Monitoring Cash Flows: The Board, the CLO, and the CFO.

The chief legal officer, the chief financial officer, and other senior officers join the chief executive officer as those with the senior-most responsibilities from the management side in ensuring that proper governance, oversight, and management are occurring. Continuous oversight and interpretation of cash flows by board and senior management are essential. Cash data can be much more understandable and give a clearer financial picture than an income statement. An analytical model shows when cash flow indicates a business operation is in the “crisis” zone and needs to be fixed or liquidated, when it is “underperforming” and needs improvement, and when it is “performing” and has an opportunity for investment and growth. Cash control activity involves managing the firm’s receipts and disbursements and monitoring the company-wide cash position. Good cash forecasts correctly recognize the amount and timing of inflows and outflows. Guidelines for reporting actual cash inflows and outflows must be realistic. [ABSTRACT FROM AUTHOR]