Cash Management

Reviewed by Anjaneyulu | Updated on Sep 28, 2020


Cash management is the process to gather and manage cash flows. This is essential to individuals and businesses alike, and it is a key component of the financial health of a firm in business. Cash is also crucial for financial security for individuals but is also generally seen as part of a total wealth portfolio.

Individuals and companies have a wide variety of services available in the financial marketplace to assist with cash management needs of all kinds. Banks are typically a primary provider of financial services to guard cash assets.

Understanding Cash Management

Cash is the main asset that individuals and companies use to meet their obligations regularly. In industry, companies have a multitude of cash inflows and outflows that need to be handled prudently to meet payment commitments, prepare for future payments, and retain sufficient business stability.

Corporate Cash management

The corporate cash management, also often known as treasury management, business managers, corporate treasurers, and chief financial officers are typically the principal individuals responsible for overall cash management strategies, cash-related responsibilities, and stability analysis.

Many companies may outsource some or all of their cash management responsibilities to various service providers. Nonetheless, many main indicators are being tracked and evaluated on a daily, weekly, quarterly, and annual basis by cash management executives.

Cash Flow Statement

The cash flow statement is divided into three parts: operation, investment, and financing. The operating portion of cash operations will vary significantly based on the net of working capital that is reported on the cash flow statement as the current assets of a company reduced by current liabilities.

The remaining two sections of the cash flow statement are somewhat straighter, with cash inflows and outflows related to investment and funding.

Internal Controls

Many internal controls are used to monitor and maintain efficient cash flows for the company. The average length of account receivables, payment procedures, write-offs for uncollected receivables, liquidity and return rates on cash equivalent assets, credit line management, and available operating cash levels are some of the critical cash-flow considerations of a company.

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