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Cash Management

Cash Management
“Business analysts report that poor management is the main reason for business failure. Poor cash management is probably the most frequent stumbling block for entrepreneurs. Understanding the basic concepts of cash flow will help a business plan for unforeseen eventualities, that nearly every business faces” (Small business, 2009. p.1.). Cash Management is important for a business to be effective, meet goals, for short-term stability and the long-term survival of a business. Securing a stable cash management system and short-term financing affects the assets, future of the business and the operations. Using the proper strategic plan and implementing the proper techniques or financing options at the correct time in the business’ duration affects the longevity of a business. How can a business manage cash better? This paper will compare and contrast various cash management techniques and the various methods of short-term financing.
Cash Management Techniques

Cash management is not as easy as balancing a check book, many techniques factor in; such as increasing a company’s profits to best control assets, nature of asset growth, the patterns of financing, and the shifts in the assets structure and financing decisions. These techniques alter a company’s financial assets and improve the company standpoint in the market. Monitoring fixed assets is a slow process for most firms, due to the slow growth as the productive volume is increased and as the old equipment is replaced. Short term, assets oscillate, depending on the level of sales and the amount of product produced. If a firm produces more than it sells, the inventory will rise. If the sales rise more rapidly than the amount of goods produced, the inventory declines and receivables rise (Block & Hirt, 2005).
As a company accumulates additional assets the operations increases value and capital of the business; the nature of asset growth, similar to controlling fixed assets, is used to...