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Cash Management. ... Cash management has five components which assist financial
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Cash Management Paper. Abstract Implementing cash management strategies can initiate
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Cash Management. Cash Management One of the most critical functions of
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Submitted by cheeri82 on July 22, 2007
Category: Business
Words: 1068 | Pages: 5
Views: 445
Popularity Rank: 18,083
Average Member Grade: N/A (Add a Comment / Grade this Paper)
Effective cash management is one of the cornerstones in small businesses. No financial goal can be achieved without proper cash management. Goals often overlap, but cash management is at the center of it all. It's the fundamental building block of financial planning. That's why it's imperative to understand your cash management situation (2006). Various methods of short term financing can also be essential to a successful business. Both cash management and short term financing will be discussed throughout the paper. Managing your working capital, managing business risks, and monitoring costs and inventory are cash management techniques to be discussed. Managing your working capital is very essential in cash management. Your level of working capital is intimately related to the flow of cash into and out of your business. Simply stated, you need enough working capital to setup the business, pay operating costs, and continue to operate until payment arrives 30, 60 or maybe even 90 days later. But if you've used a lot of that working capital to pay for fixed assets, you may come up against a crash crunch that prevents you from paying suppliers, buying materials and even paying yourself a salary. It's a good idea then, to maintain a level of working capital that allows you to make it through those crunch times and continue to operate the business. Short-term financing such as a line of credit (LOC) can be used to make emergency purchases or to bridge the gap between month's-end payables and receivables. An LOC can be negotiated with your financial institution, and this should be done before any need actually arises (BDC, 2005). There are many risks involved in running a business, and serious challenges should be expected at some time in the future. You can reduce the risk of cash-crunch due to this type of situation, by planning ahead and having a more diversified client base. If you're not dependent on one large order or client, your livelihood...
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