This chapter discusses several issues pertaining to the management of cash, including the cash cycle and a definition and examples of the cash conversion cycle. We present the benefits of cash forecasting, in addition to different techniques to invest idle cash for a period of 30 days and beyond. We discuss compensating balances and lastly suggest several ways to optimize the collection and disbursement floats.
The Importance of Cash Flow
Some authors have suggested that cash flow is more important than net income for an organization. Although I do not agree with the generalities of the statement, every organization needs to generate an adequate amount of cash flow, and if surplus cash occurs periodically, it needs ...