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Cash Management and Short-Term Financing. Introduction It is important for
companies to manage their cash because holding a lot of ...
... cash as needed. Both cash management and short term financing will be discussed
throughout this paper. Managing your working capital ...
... to be executed, the financial managers must be knowledgeable and understand the
concepts of cash management and the significance of short- term financing.
... cash management techniques, maintaining a cash reserve is ... is implemented by the
financial management team ... Short-Term Financing Methods The main methods of short ...
... best way to manage business cash and short term financing better is to start with
understanding how good cash management and short term financing practices can ...
Submitted by kakeskt on August 25, 2006
Category: Miscellaneous
Words: 1562 | Pages: 7
Views: 887
Popularity Rank: 6,909
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Introduction
It is important for companies to manage their cash because holding a lot of cash is not necessarily a good thing. In fact many companies will not hold onto excess cash and will in fact invest it into short term investments. Choosing how to manage cash and how to invest the excess is a decision that is up to the company, and is not necessarily an easy one. If a company does not have any, or not enough, excess cash they may need to consider short-term financing to augment their supply. How they choose which financing to use is often more complicated then deciding whether or not they need it.
Managing Cash
Cash management in handled though the cash-flow cycle. This cycle relies on when and how funds are collected as well as paid out and how fast the banking system is (Block and Hirt, 2004). For instance if a supplier cashes a check too soon, and the bank is slow to process checks from customers, there may be a negative balance of cash in the company’s account.
Cash flow has become a complicated issue for companies in this technological age we live in. With the advent of online shopping companies are speeding up the collection process by use of credit card. When buying online customers have to pay with credit card, which the card companies than pay the company within one to two weeks of purchase. Another benefit of the digital age is how stores can link to each other and to a central bank in order to speed up the cash management process. At the end of the day all of the stores computers talk to each other, and any excess cash balance can be put into the central bank and used for investments (Block and Hirt, 2004). There is a big draw back to all of this technology, and that is safety. High-tech thievery is on the rise and companies have to be careful how they choose to transfer information over the internet or any other way that has the potential to be hacked into.
Cash management is not only about how...
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