Management of Cash

Your logo

Financial Management
here

Prof. Pashmina Shah

Management of Cash
Concept:
Cash management is concerned
with the managing of:
cash flows into and out of the firm
cash flows within the firm
cash balances held by the firm at a
point of time by financing deficit or
investing surplus cash
Prof. Pashmina Shah

Cash Management Cycle

Prof. Pashmina Shah

Motives for Holding Cash

The Transactions motive

The Precautionary motive
The Speculative motive

Prof. Pashmina Shah

Objectives of Cash Management

To meet the cash disbursement
needs(Payment Schedule).
To minimize funds committed to cash
balances.

Prof. Pashmina Shah

Cash Management Techniques

Speedy Cash Collections
Slowing Disbursements

Prof. Pashmina Shah

Cash Management Techniques

Speedy Cash Collections:
Prompt payment by customers
Early conversion of payments into
cash
Concentration banking
Lock-box system

Prof. Pashmina Shah

Cash Management Techniques

Slowing Disbursement
Avoidance of early Payments
Centralized Disbursements
Float
Paying from a distant bank
Cheque-encashment analysis
Accruals
Prof. Pashmina Shah

Cash Budgeting
Format for cash budgeting:
Particulars

Amt

A)Opening Balance
B)Cash Receipts

Total (A+B)
C) Cash Payments
Total (C)
D) Closing Cash Balance
(A+B-C)
Prof. Pashmina Shah