Cash_Management - Cash Management Comparison Cash...

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Cash Management Comparison Cash Management Comparison Many organizations make a financial goal to minimize the amount of cash on hand on a monthly basis. This goal is based on attempting to reduce the amount of non-earning assets for the company. Cash on hand that is not required to meet a specific need could be placed in an interest bearing account or used to pay down on a credit balance, also reducing the amount of interest a company would have to pay on a loan. “Minimizing cash balances as well as having accurate knowledge of when cash moves into and out of the company can improve As companies find a need to supplement business financial goals, obtaining credit or loans on a short-term basis is very attractive. Several options exist that organizations can explore when seeking short-term financing and each has an advantage or disadvantage over the other, based on the objectives the funds will be used for and or the length the funds will be borrowed. Cash Management Techniques “Cash flow relies on the payment pattern of customers, the speed at which suppliers and creditors process checks, and the efficiency of the banking system. The primary consideration in managing the cash flow cycle is to ensure that inflows and outflows of cash are properly synchronized for transaction purposes.” (Block & Hirt, 2004, pg. 175) When a company has positive control of the flow cash on a monthly basis the ability to determine the on hand cash requirements becomes easier to manage. This control can be based on the complexity of the cash flow process. Financially savvy companies also take advantage of cash balances recorded and the balances
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This note was uploaded on 02/18/2012 for the course HISTORY hs101 taught by Professor Lynch during the Spring '12 term at Dublin City University.

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Cash_Management - Cash Management Comparison Cash...

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