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Effective Cash Management Strategies

Cash is an important current asset for businesses that must be managed properly. There are three main motives for holding cash: transactional needs, precautionary needs, and speculative opportunities. Effective cash management involves planning and forecasting cash inflows and outflows, monitoring cash balances and flows within a firm, and determining an optimal level of cash to hold. Key aspects of cash management include collecting payments promptly, converting payments to cash quickly, managing disbursement timing and methods, and preparing cash budgets to aid decision making.

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Tarun Dhir
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7 views10 pages

Effective Cash Management Strategies

Cash is an important current asset for businesses that must be managed properly. There are three main motives for holding cash: transactional needs, precautionary needs, and speculative opportunities. Effective cash management involves planning and forecasting cash inflows and outflows, monitoring cash balances and flows within a firm, and determining an optimal level of cash to hold. Key aspects of cash management include collecting payments promptly, converting payments to cash quickly, managing disbursement timing and methods, and preparing cash budgets to aid decision making.

Uploaded by

Tarun Dhir
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

By: Simrandeep Singh

Cash is the one of the current asset of the business. A


business should always keep sufficient cash for
meeting its obligations.
Motive for holding Cash
1. Transaction Motive
2. Precautionary Motive
3. Speculative Motive
Cash Management
Cash management has assumed importance because
it is the most significant of all the current assets.
Cash management deals with the following:
1. Cash inflow and outflow.
2. Cash flows within the firm.
3. Cash balance held by the firm at the point of time.
Cash management needs strategy
to deal with various of faces of
cash.

1. Cash planning
2. Cash forecast and budgeting
Managing cashflow
Methods of managing cash inflow.
1. Prompt payment by customer.
2. Quick conversion of payment into cash.
3. Decentralized collections.
4. Lock block system.
Method of managing cash outflow
1. Paying on last date.
2. Payment through draft.
3. Adjusting payroll funds.
4. Centralization of payment.
5. Inter bank transfer.
Determining optimum cash balance
Cash budget
Cash management model
THANK
YOU

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