Cash Management

Effective cash management strategies are used throughout the business world on a daily basis. Many companies chose to implore tactics and strategies to help maximize their cash holding in a variety of different ways. The modern world of business today makes it unnecessary to physically hold onto large sums of cash. Many strategies used by companies are geared around investing this cash in to what is commonly known as short-term investments. How much cash is invested and how much cash is retained is a decision that requires a lot of not only business knowledge, but also knowledge of the overall marketplace at any given time. One of the most crucial factors in determining how much to retain and how much to invest is being able to forecast future revenue and expenses. A company can potentially jeopardize its operation if they commit to much, or even don't commit enough. Money left lying around is not as beneficial as some might think.

Managing cash is done according to the cash-flow cycle. That technique relies on the means and methods of how money is collected and disbursed as well as how the banking system keeps up with it. (Block and Hirt, 2005) The idea behind cash flow is becoming increasingly more efficient in ways yet also more complicated at times due to modern advances in technology. Some examples of increased efficiency levels can be attributed to the creation of the virtual environment/internet. It has become common practice for people to purchase and spend money over the Internet using credit cards. These companies intern pass everything along to the credit card companies electronically and before you know it the company receives a check for all the products sold. These virtual stores have even taken it one step further. They have created these online networks throughout their organization and set