Cash management is the corporate process of collecting and managing cash, as well as its use for investment (short-term). It is a key component to ensure the financial stability and solvency of a company. Corporate treasurers or business managers are often responsible for overall cash management and responsibilities related to remaining solvent.
Successful cash management involves not only avoiding insolvency, but also reducing the length of accounts receivable, increasing collection rates, selecting appropriate short-term investment vehicles, and increasing available cash to improve cash position and profitability Of a company.
Successful cash management is an essential skill for small business developers because they typically have less access to affordable credit and have a significant amount of upfront costs to manage while waiting for accounts receivable. Wisely managing cash allows a company to cover unexpected expenses, and to regularly handle events such as payroll distribution.
Cash management refers to a broad area of finance that involves the collection, management and use of cash. It is about evaluating the liquidity of the market, the cash flow and the investments.
In banking, cash management is a marketing term for certain services related to cash flow primarily offered to larger business customers. It can be used to describe all bank accounts (such as checking accounts) provided to businesses of a certain size, but is most often used to describe specific services such as cash concentration, zero balance accounting and automated clearing facilities. Sometimes, private banking clients receive cash management services.
