Cash Managment Paper
Introduction
Managing cash flow has become a critical part of the business operation. Production and financial measurement is a key factor in determining if a company is successful within the industry or if they need to improve their way of doing business.. This paper will focus on the financial side and compare and contrast the various cash management techniques. To make sure that a company has enough cash flow to keep the operations running smoothly is essential to operations, so over the course of this paper there will also be an analysis of short-term financing options that are available to companies.
Cash Management Techniques
"Managing cash is becoming ever more sophisticated in the global and electronic age of the new century as financial managers try to squeeze the last dollar of profit out of their cash management strategies." (Block-Hirt, 2005) This statement shows why cash management is more important today than it was 20 years ago and why proper planning and forecasting is one of the key elements in making the correct business decision and making sure the company has enough income to sustain operations and grow.
By having a financial department that is always trying to take a proactive approach in their operations will lead the company in using very efficient ways of controlling cash flow. "Cash balances are largely determined by cash flowing through the company on a daily, weekly, and monthly basis as determined by the cash flow cycle." (Block-Hirt, 2005)
Maintaining a Cash budget is another cash management technique that can help companies track cash flows and cash balances. Cash flow for a company relies on several factors such as the payment pattern of the customers, speed at which the checks are processed and how efficient the banks are at deducting accounts. With a cash budget companies can keep better track of their cash flow and minimize loss of cash.
Another way for companies to help manage...
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