Cash Management Paper – Week 3
Introduction
Todays global financial market has progressively become more volatile, and driven by the
demand for growth and bottom line profitability. Cash is a companys livelihood. If
managed properly a company remains healthy, strong and vibrant. However, if a company
manages the cash-flow poorly, then the company can suffer some form of a cardiac arrest.
Companies that do not value cash management as an important issue are probably
undermining the companys short-term stability, and its long-term survival.
Short term financing is not ideal for all kinds of capital shortfalls; generally, short term
debt should fund business activities that will generate cash flow to repay the loan. Business
people need to distinguish between a temporary investment in current assets and a
permanent investment. With temporary investments, companies can finance the purchase
of the asset with the intent of liquidating the asset in the normal course of the business.
The best way to manage business cash and short term financing better is to start with
understanding how good cash management and short term financing practices can
influence a companys growth and survival, then start maximizing cash-flow, which can be
done by making certain the billings, collections, and payables are operating efficiently
(Find Articles, 2006). In this report a comparison and contrast of both cash management
and short-term financing will be explored, as well as, examples of how the two terms are
compared and contrasted in detail.
Cash Management Compare and Contrast
Cash management strategies include budgeting, keeping financial records, maximizing the
interest earned on checking and savings accounts, and regularly preparing financial
