What is the company's cash management?
Management of business cash is a process that a large organization uses to manage its cash flow. Some organizations call this Treasury Management function because the process of the organization is often responsible for this process. This process involves determining policy, management of collections, completing short -term investments and risk management. Each organization creates and implements its own cash management process. Each of these areas is a factor in business cash management. The principle of loan extension is managed on the basis of the risk position of the organization. Payment conditions provided to a specific group of clients are determined for the purpose of administration of the company's cash position. Some clients can receive short payments windows, while other clients may have a longer time to pay invoices.
The organization must determine how a person will have a risk. Some companies are comfortable with higher risk to gain more return on some of their investments. These organizationsIn its principles of business cash management, it will determine to expand their credit to a larger group of clients. Some of these clients do not have to make their payments, but by increasing the number of clients to which the loan is extended, the company is likely to get more business than loses.
collection processes also differ according to the base of the company and clients. Some companies decide to automate all or part of the collection reminder process. Other companies may observe the formulas of their clients' payments to determine when a reminder is required. Other companies can use the philosophy of carrots and HELP to improve collections where the client receives a discount if the client pays soon, but is the subject of interest fee if the client pays late. Each business cash management program should be adapted to the company and its clients to increase the company's cash flow.
Some companies performShort -term investment using excessive cash within the company's accounts on a given day. The processes used to determine how much cash exceed the daily needs of the company are usually included in the business cash management plan. The treasurer only invests this cash, which the company does not use on a given day or period of time. Many large companies make short -term investments a day, while smaller companies could invest the investment every week or monthly.