The concept of cash management refers to the set of organizational and strategic measures that affect monetary flows and the results of a company in financial matters. Basically it addresses the optimization of expenses and income related to the placement of surpluses and the obtaining of external funds, minimizing risks and providing the organization with a correct degree of liquidity and indebtedness.
Therefore, cash management in the company deals with the management of financial resources that the company has, payment and negotiation with financial entities and in the operation of the basic functions of the collection company.
Cash management functions
The concept of cash management goes beyond the management of treasury. This term is defined as the management of immediate liquidity, present in cash or in accounts with financial institutions. For its part, cash management encompasses a broader concept, since it incorporates the financial factor of managing sales and customer collections, in addition to the management of acquisitions and payments to suppliers.
Among the functions of cash management are the following:
- Study of the circuits of monetary flows of the company.
- Review of the different means of collection and payment used in these circuits.
- It is responsible for managing the treasury balances, of the resources available by the company.
- Study and permanent monitoring of financial market conditions.
- Optimization of economic results from treasury management.
- Control of the company's liquidity through the permanent treasury plan and the control of its development.
Therefore, cash management can be defined as the management of the liquidity of the company, understanding this as the volume of money in banks and cash, and its ability to get it from the financial market. It is integrated into the current management of the company, and therefore implies the management of the flow of funds of the same through the use of a series of tools.
Control of expenses