Based on no actual first hand knowledge (on q 1)

Seems like it’s totally standard for transfer deals to be settled in ma y instalments and with many add ond.

So I expect our FD won’t just have in his head the cash that we have in the bank today, but cash flow model over years ahead. This will show the cash ins and outs from all sources over a long period, and from this he’ll be able to see whether there will be periods where we’ll go overdrawn waiting for a lump sum to come in, whether we can handle that short term cash dip under existing OD arrangements, what the cash position looks like if we sell player X, if we cancel Naismith’s contesct now, and if we buy player Y with some given profile of payments and wages.

Basically he’ll know the entire future cash projection based on modelled income assumptions and outgoing assumptions and will probably have several scenarios of that. He’ll then have some liquidity metrics that he’ll monitor as red flags. An early warning that a cash crunch might be coming, hopefully in time to do something about it.

At least this is kind of what the FD does in the firm I work for.

Tl;dr

It’s a lot more complicated that assuming that all we need to know is how much cash we’ve got in the bank today.

Posted By: Under soil heating on June 16th 2018 at 08:33:32

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