4 facets

1. Cash Planning

As an integral element of company’s expenditure management, company need

to develop cash planning and management to keep within budgeted expenditure
in cash terms;

(1) to ensure that expenditures are smoothly financed during the year, so as to
minimize borrowing costs;

(2) to enable the initial budget policy targets, especially the surplus or deficit, to
be met;

(3) to contribute to the smooth implementation of both fiscal and monetary

policy

2. Managing the Cash Flow

Managing your cashflow is important because it can unlock value for your
company and increase the reward to owners. It helps you mitigate risk, plan
investment, and collect from accounts for which you have rendered services.
It can give you insights into your company and help you make strategic
decisions

3. Optimum Cash Level

Being able to do manage cash efficiently means that the entity can keep
money in its reserves, pay off its financial obligations, and invest for
future development. The quick ratio is a calculation that measures a
company's ability to meet its short-term obligations with its most liquid
assets.

4. Investing Surplus Cash

A cash surplus is the additional cash that your limited company retains that
exceeds the amount required for day-to-day operations.
 If you’re planning to continue growing your business then you could
consider using the extra cash to fund future growth, either through
investing in other assets such as property, plant, machinery, people or
products or to fund a business acquisition.

Another way to invest surplus cash is by funding the Research and Development of
your company. The benefits of investing in R&D are numerous and it can be a
great way to stay ahead of your competition and to bring new innovative products,
processes and services into the market.

In today's competitive world, businesses with an effective R&D strategy are more
likely to succeed than those without it.

FACTORS DETERMINING CASH NEEDS

1. Synchronizing Cash Flows – Refers to developing equilibrium between inflow

and outflow of cash in the business. If the amount of cash inflow is equal to the
cash payment (outflow) then there would be no requirement of holding extra cash.

https://www.imf.org/external/pubs/ft/expend/guide5.htm#:~:text=Cash
%20planning%20has%20three%20main,of%20both%20fiscal%20and
%20monetary

https://innoviapartners.com/importance-cashflow-management/#:~:text=Managing
%20your%20cashflow%20is%20important,help%20you%20make%20strategic
%20decisions.

https://www.hwca.com/accountants-wirral/opinion/managing-surplus-cash-in-
your-company/