Cash Management


DEFINITION of 'Cash Management'

The corporate process of collecting, managing and (short-term) investing cash. A key component of ensuring a company's financial stability and solvency. Frequently corporate treasurers or a business manager is responsible for overall cash management.

Successful cash management involves not only avoiding insolvency (and therefore bankruptcy), but also reducing days in account receivables (AR), increasing collection rates, selecting appropriate short-term investment vehicles, and increasing days cash on hand all in order to improve a company's overall financial profitability.



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BREAKING DOWN 'Cash Management'

Successfully managing cash is an essential skill for small business developers because they typically have less access to affordable credit and have a significant amount of upfront costs they need to manage while waiting for receivables. Wisely managing cash enables a company to meet unexpected expenses in addition to handling regularly-occurring events like payroll.

  1. Accelerated Reply Mail - ARM

    An expedited delivery of business reply mail offered by the U.S. ...
  2. Disbursement

    The act of paying out or disbursing money. Disbursements can ...
  3. Automated Clearing House - ACH

    An electronic funds-transfer system run by the National Automated ...
  4. Accounts Receivable - AR

    Money owed by customers (individuals or corporations) to another ...
  5. Wire Transfer

    An electronic transfer of funds across a network administered ...
  6. Insolvency

    When an individual or organization can no longer meet its financial ...
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