Running head: CASH MANAGEMENT
Cash Management
University of Phoenix
Appropriate cash management and short-term financing are important entities to any business, as it allows for a business to increase its earnings. Cash management is a subset of treasury management, and it involves the collection, mobilization and disbursement of cash within a business enterprise. Moving funds and managing the information related to the funds’ flows and balances are fundamental to good cash management. With a strong understanding of the banking system and the products and services offered by banks, the cash manager can achieve effective mobilization of funds, prudent investing of these funds, and cost-effectiveness in services used (Zietlow, 2007). In comparing the various techniques of cash management this paper will look at the technique of float, wire transfers, controlled disbursements, and automated clearing house. With Short-term financing, a business is able to secure funds in order to meet production, and operating needs so it can maximize its profitability. This paper will also review, compare, and contract the methods of short-term financing which are referred to as trade credit, commercial paper, accounts receivables financing, and inventory financing.
In cash management, float involves controlling the collection and disbursement of the cash, with the objective for the cash collection to lessen the time in which a customer pays and the time the checks clear on the end of the business. There are various types of floats: payments that depend on the postal system (mail), payments that are dependent on the time it takes the company to process (processing), and the time it takes for a bank to clear payments (availability); with an example being paying bills by check via the mail.
A wire transfer is considered an electronic transfer of funds. Wire transfers are conducted through a transfer in bank accounts, or other entities that allow for a transfer of cash....