What Are the Goals of Cash Management for a Business?
By Bradley James Bryant
How to Establish Strong Internal Controls Over a Non-Profit
How to Prepare a Cash Budget for Each of the First Two Quarters of a Year
Finance Audit Checklist
Uses and Sources of Cash From a Balance Sheet
Accounting Ethics & Cash Accounts
Cash management helps to ensure that adequate levels of capital are available to a business for short-term needs such as inventory purchases. A good cash management program can significantly influence the efficiency of operations, which can also reduce overall costs. The goal of most cash management systems is to eliminate surprises related to cash by meeting the daily cash requirement at the lowest cost possible.
One of the most important goals of any cash management system is to help the business stay legal. While maintaining adequate levels of cash on hand is important to keep costs low and inventory levels steady, the legal implications of an error in financial accounts are serious. As such, much time is spent on developing robust financial controls which audit and prevent errors in cash receipts, disbursements and paying taxes.
Clear Financial Communication
It is the role of the CFO and/or Treasurer to establish a clear way to communicate with the organization for any issue relating to cash management. This requires communication directly with department heads. Many Treasurers create the Cash Flow Statement (a cash budget) as a way to communicate changes in cash flow to both internal and external stakeholders. This also helps to forecast cash disbursements and collections.
Develop External Financial Relationships
Cash management is usually a joint effort between the Treasurer and the banker. Cash management products are constantly evolving. It is the goal of the Treasurer to stay abreast of the latest products, which helps to establish a professional financial relationship with representatives from the banking community. A good record for cash management can lead to better funding opportunities in the future.
MASSCTA: Treasurer's Manual--Chapter 11
Working as a full-time freelance writer/editor for the past two years, Bradley James Bryant has over 1500 publications on eHow, LIVESTRONG.com and other sites. She has worked for JPMorganChase, SunTrust Investment Bank, Intel Corporation and Harvard University. Bryant has a Master of Business Administration with a concentration in finance from Florida A&M University.
What Information Do You Need to Fully Assess Liquidity?
What Is the Relationship Between Working Capital & the Cash Conversion Cycle?
What Is an Expenditure Budget?
What Is Cash Segmentation?
Reconciliation Methods for Cash Flow Statements in Compliance With GAAP
Importance of Cash vs. Profit
What Goal Should Always Motivate the Actions of the Financial Manager?
The Similarities Between a Cash Budget and Long-Term Financial Planning
What Is a Cash Disbursement System?
1 What Information Do You Need to Fully Assess Liquidity?
2 What Is the Relationship Between Working Capital & the Cash Conversion Cycle?
3 What Is an Expenditure Budget?
4 What Is Cash Segmentation?