Cash Management And Short-Term Financing
Cash Management and Short-Term Financing
University of Phoenix
Introduction
With companies looking to grow bigger and better each year the role of managing cash flow as become a critical part of the operation. Production and financial measurement is a key factor in determining if a company is successful or in need of improvement. This paper will focus on the financial side and compare and contrast the various cash management techniques incorporated to run a successful business. Making 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
The key to great asset planning is the ability of management to accurately forecast sales to production and plan accordingly. Whenever actual sales are different from forecasted sales, unexpected buildups pr reductions in inventory will occur that will eventually affect receivables and cash flow [Block, Hirt, 2005]. This statement proves the 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. Being proactive in operations can be a very efficient way of controlling cash flow. Some firms use level production methods which help smooth operation schedules and manage equipment and labor at a lower cost. By matching production with sales it eliminates waste; if production is high and sales are low a business may be wasting important resources that can be used elsewhere. If resources are being wasted on items that are not critical to business operations it can put the health of the company in jeopardy. One way that companies have been able to match sales lately have been by the use of technology and the use of point of sales terminals (POS). The...
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