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CASH MANAGEMENT

CASH MANAGEMENT. BY-. CASH MANAGEMENT. Cash management is concerned with the managing of: cash flows into and out of the firm, cash flows within the firm, and cash balances held by the firm at a point of time by financing deficit or investing surplus cash. Four Facets of Cash Management.

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CASH MANAGEMENT

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  1. CASH MANAGEMENT BY-

  2. CASH MANAGEMENT • Cash management is concerned with the managing of: • cash flows into and out of the firm, • cash flows within the firm, and • cash balances held by the firm at a point of time by financing deficit or investing surplus cash

  3. Four Facets of Cash Management • Cash planning • Managing the cash flows • Optimum cash level • Investing surplus cash

  4. Managing Cash Collections and Disbursements • Accelerating Cash Collections • Decentralised Collections • Lock-box System

  5. Case of Simpson’s Scuba Inc. • Current no coordinated cash management system • Cash-acceleration plan proposed that involves both a lock-box system and concentration bank.

  6. COST ANALYSIS • OPPORTUNITY COST • FUNDS FREED*RATE OF INTEREST =$504000 • SAVING IN EXPENSES =$48000 TOTAL $552000 • COST OFPROPOSED NEW SYSTEM • CHEQUE PROCESSING COSTS $29700 • COST OF ATDC $7560

  7. RECOMMENDATION • Its annual gain is (Opportunity cost - cost of new system) =$514740 • ACCEPT THE NEW SYSTEM

  8. THANKS ANY QUERIES!

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