Before we dive into cash management, let us fist understand what we mean by cash and what constitutes cash in context of cash management process.
Simply put, cash is money that you can access.
Businesses get cash by selling their products and services. However, businesses also have a variety of additional sources they can tap into when they need cash, called cash equivalents.
These are safe short-term liquid securities that can be converted to cash relatively quickly.
Cash equivalents are short-term investments that can be readily converted into a known amount of cash.
A business considers cash equivalents to be the same as cash in the bank.
Some examples of cash equivalents are investments that mature in less than three months, money market funds, certificates of deposit (or CDs), bonds with short maturity dates and commercial paper.
Treasury Management - Benefits
Effectively using treasury management with cash management and trade finance products brings tangible benefits to both corporates and financial institutions. Let us discuss some tangible benefits of treasury function.
In automated clearing, Bank statement details are automatically matched and reconciled with system transactions. Learn how this process works and what are the perquisites to enable the same.
Why enterprises need cash management. What is the purpose of having a well defined cash management process?
Disbursement Float is the time taken from payment creation to settlement. Collection float is the sum total of time taken by Payment Float; Mail Float; Processing Float and Availability Float. Learn more!
Many different accounts are used in finance. Understand the representation and nature of clearing account in context of accounting, finance and ERP Systems.
The Cash Clearing process enables you to track amounts that have actually cleared your bank. Till reconciliation happens the amounts are parked in 'Cash Clearing Account'.
In the previous article we talked about the meaning of the account reconciliations. Now as you now the definition of account reconciliation, in this article let us see why it is carried out.
Cash Clearing – Accounting Entries
The Cash Clearing process enables you to track amounts that have actually cleared your bank. Learn the steps and accounting entries that gets generated during the cash clearing process.
Treasury Management - Functions
Treasury management has become an specialized function. Treasury function helps in managing the Risk-return profile as well as the tax-efficiency of investment instruments. In larger firms, it may also include trading in bonds, currencies and financial derivatives. Learn about the various tasks, activities and imperatives, undertaken by treasuries in in today's context.
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