Hiring guide
Group cash is not always available to the entity that needs it
By CFO Index · Published
A group can report enough cash overall and still have one company unable to meet its next payment. Ask your fractional CFO to show where the money sits, what each entity must pay and which transfers are actually available by the deadline. A consolidated balance alone cannot answer those questions.
Start with the payment, not the group total
Name the legal entity that owes the payment, its currency and the required settlement date. Then identify accounts that entity owns and can operate. Keep a dated balance source and distinguish cleared funds from expected receipts. A receivable from another group company is not a bank balance. Neither is an undrawn facility automatically usable cash: record its conditions and availability separately. These distinctions belong in an operational cash schedule, even when management also uses a consolidated report.
Keep restrictions separate from operating commitments
Record confirmed restrictions with a reference to the relevant agreement or adviser confirmation. Separately show planned local payments and management's chosen operating buffer. A buffer is not a legal restriction, and an upcoming supplier payment is not necessarily a segregated deposit. Mark uncertain amounts as unconfirmed rather than assuming they are transferable. The IFRS Interpretations Committee's April 2022 IAS 7 decision illustrates the distinction: in its specified fact pattern, contractual use restrictions did not stop an accessible demand deposit being classified as cash. Accounting classification is therefore not proof that a balance can fund any group purpose.
Use one row per entity before considering transfers
The following hypothetical example uses euros throughout, a common cutoff and no incoming receipts before the payment deadline. The restrictions and commitments are invented assumptions, not statements about any jurisdiction. Restricted amounts and listed operating payments do not overlap.
| Entity | Bank balance | Restricted for other purposes | Local payments due | Remainder before transfers |
|---|---|---|---|---|
| A | 120,000 | 40,000 | 60,000 | 20,000 |
| B | 10,000 | 0 | 45,000 | -35,000 |
| C | 70,000 | 0 | 50,000 | 20,000 |
| Group arithmetic | 200,000 | 40,000 | 155,000 | 5,000 |
A positive remainder does not solve B's shortfall
The group arithmetic leaves €5,000, but B still needs €35,000 by its deadline. A and C each show €20,000 after the specified items; this is only a candidate source, not an approved transfer. In the illustration, a possible route would be €20,000 from A and €15,000 from C. That route works only if the transfers are permitted, approved and settled in time, and the retained amounts are acceptable to the responsible entities. Show B's shortfall unchanged in the no-transfer case until the route is supported.
Require evidence for each proposed movement
Give every transfer a sending entity, receiving entity, currency, proposed amount, intended basis and earliest settlement date. Ask the relevant local accounting, tax and legal advisers to confirm the route and any applicable conditions; do not label every movement a loan or dividend by default. Record necessary approvals and the bank's execution requirements. A director's preference or online banking access does not establish that a transfer is appropriate. This guide organises questions; it does not authorise an intercompany transaction.
Show both sides without manufacturing group cash
Use one transfer reference in both entity forecasts. When A sends €20,000 to B, A's projected balance falls and B's rises; it does not create €20,000 of external group receipts. Keep fees and currency conversion effects separately identifiable where relevant. If settlement spans reporting cutoffs, show the in-transit status and reconcile it rather than forcing both bank balances to update simultaneously. Retain a scenario where an unconfirmed transfer is delayed, so the team can see which payment decision needs escalation.
Make the first CFO deliverable a usable exception list
Request the account-to-entity map, dated cash schedule and transfer register together. The exception list should identify imminent shortfalls, missing evidence, decision owners and deadlines. Ask another finance team member to trace one balance and one proposed transfer back to their evidence. Refresh after material receipts, payments or restrictions change. The acceptance test is simple: management can identify which entity needs action and by when, without assuming that the group total is one shared bank account.