What is the Cash Manangement
                     WHAT IS THE CASH 
MANAGEMENT?
What is Cash Management?
• Cash management, also known as treasury management, is the process 
that involves collecting and managing cash flows from the operating, 
investing, and financing activities of a company. 
• In business, it is a key aspect of an organization’s financial stability.
Source: corporatefinanceinstitute.com
Receivables Cash Management
• Any amount which the company has earned however not yet received, i.e. 
its outstanding and is expected to be received in future, is known as 
receivables.
• An organization must manage its receivables to maintain the surplus cash 
inflow.
Source: theinvestorsbook.com
Payables Cash Management
• The payables refer to the payment which is unpaid by the organization and 
is to be paid off shortly.
• The organization should plan its cash outflow in such a manner that it can 
acquire an extended credit period from the creditors.
Source: theinvestorsbook.com
OBJECTIVES OF CASH 
MANAGEMENT
Fulfil Working Capital Requirement
• The organization needs to maintain ample liquid cash to meet its routine 
expenses which possible only through effective cash management.
Source: corporatefinanceinstitute.com
Planning Capital Expenditure
• It helps in planning the capital expenditure and determining the ratio of 
debt and equity to acquire finance for this purpose.
Source: corporatefinanceinstitute.com
Handling Unorganized Costs
• There are times when the company encounters unexpected circumstances 
like the breakdown of machinery. 
• These are unforeseen expenses to cope up with; cash surplus is a lifesaver 
in such conditions.
Source: corporatefinanceinstitute.com
Avoiding Insolvency
• If the business does not plan for efficient cash management, the situation 
of insolvency may arise. 
• It is either due to lack of liquid cash or not making a profit out of the 
money available.
Source: corporatefinanceinstitute.com
FUNCTIONS OF CASH 
MANAGEMENT
Inventory management
• Higher stock in hand means trapped sales and trapped sales means less 
liquidity.  Hence, an organization must aim at faster stock out to ensure 
movement of cash.
Source: cleartax.com
Forecasting
• While planning investments, the managers need to be very careful as they 
need to plan for future contingencies and also ensure profitability. 
• For this, they must use efficient forecasting and management tools. When 
the cash inflows and outflows are efficiently managed it gives the firm 
good liquidity.
Source: cleartax.com