Cash Management

Cash Management

Precisely speaking, the primary of cash management in a firm is to trade-off between liquidity and profitability in order to maximize long-term profit. This is possible only when the working capital pool. This overall objective can be translated into the following operational goals :

(i)  To satisfy day-to-day business requirements ;

(ii)  To provide for scheduled major payments ;

(iii)  To face unexpected cash drains;

(iv)  To seize potential opportunities for profitable long-term investments :

(v) To meet requirements of bank relationships;

(vi) To build image of credit worthiness ;

(vii) To earn on cash balance ;

(viii) To build reservoir for net cash inflows till the availability of better uses of funds by conscious planning.

(ix) To minimize the operating costs of cash management.