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Cash Management

Running head: CASH MANAGEMENT

Cash Management
MBA 503

University of Phoenix

Cash Management
Introduction
According to research and past job experiences, cash management is arguably the most crucial aspect of running a business, in the short term and the long term success of the organization. The main reason that businesses fail is reportedly due to poor cash management. (U.S. Small Business Administration.) Cash management and short-term financing affect the operations, assets, and future of the business. Using the proper management and financing skills, a company can be successful and have a well designed and strategic plan for the business market. Implementing the proper techniques or financing options at the correct time in the business’ lifetime will affect the longevity of the company. If the correct decision is executed then the company thrives, on the contrary, if the wrong decision is executed at the wrong time, the result for the business might ultimately result in the demise of the company.
Cash Management Techniques
Cash management techniques include investing, budgeting, spending and saving the business’ money in ways that increase profits or otherwise benefit the company. A few cash management techniques include controlling assets, nature of asset growth, patterns of financing, shifts in assets structure and financing decisions. These techniques are used to alter the company’s financial assets to improve their stance in their respective marketplace as well as the company as a whole. Controlling fixed assets, in most firms, grow slowly as productive capacity is increased and old equipment is replaced, but current assets fluctuate in the short run, depending on the level of production versus the level of sales. When the firm produces more than it sells, inventory rises. When sales rise faster than production, inventory declines and receivables rise, (Block & Hirt, 2005, Chpt. 6, p. 3). Adding assets to the company’s...