Cash Management

Cash Management Paper - Week 3

Introduction

Today's global financial market has progressively become more volatile, and driven by the demand for growth and bottom line profitability. Cash is a company's livelihood. If managed properly a company remains healthy, strong and vibrant. However, if a company manages the cash-flow poorly, then the company can suffer some form of a cardiac arrest. Companies that do not value cash management as an important issue are probably undermining the company's short-term stability, and its long-term survival.

Short term financing is not ideal for all kinds of capital shortfalls; generally, short term debt should fund business activities that will generate cash flow to repay the loan. Business people need to distinguish between a temporary investment in current assets and a permanent investment. With temporary investments, companies can finance the purchase of the asset with the intent of liquidating the asset in the normal course of the business.

The best way to manage business cash and short term financing better is to start with understanding how good cash management and short term financing practices can influence a company's growth and survival, then start maximizing cash-flow, which can be done by making certain the billings, collections, and payables are operating efficiently (Find Articles, 2006). In this report a comparison and contrast of both cash management and short-term financing will be explored, as well as, examples of how the two terms are compared and contrasted in detail.

Cash Management Compare and Contrast

Cash management strategies include budgeting, keeping financial records, maximizing the interest earned on checking and savings accounts, and regularly preparing financial statements, such as net worth and cash flow (AnswerIndex, 2006). One of the soundest pieces of financial advice is for a company to spend less than it earns. It may sound very simple, but if a company is not fully aware of how it needs to spend money, the company may end of spending more than they realize. After companies tracks its income and expenses, following a budget that is adjusted to the company's situation and goals is an excellent strategy to plan for spending (AnswerIndex, 2006).

To estimate