Definition: What is Cash Management
Cash management is defined as the practice of managing and spending cash.
From a business perspective, cash management is an integral part of a company’s financial stability.
It helps ensure that the company has enough liquidity and solvency to avoid running out of cash.
In many cases, the process is handled by the company’s business manager.
Overview of Cash Management
Proper cash management is essential for any company’s existence.
It is especially important for small businesses since their resources are much more limited, and in many cases they having nothing to fall back on.
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Cash management requires lots of foresight and careful analysis of potential short-term investments.
Short-term gains should not be ignored in any way, since their benefits can prove enough to cover the company’s day to day needs.
Short-term investments are usually less risky and require less money than their long-term counterparts. That being said, they should still be based on careful planning and a strong understanding of the market.
Successful cash management will ensure that the business can handle both its long-term and short-term expenses, and hence avoid bankruptcy.
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