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.
Complete Bank Reconciliation Process
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Introduction to Cash Clearing Process
Unravel the mystery behind clearing accounts. Learn why clearing accounts are used in finance and accounting. Learn why so many clearing accounts are defined in ERPs and Automated Accounting Systems.
The topic for this lesson is "Introduction to Cash Management Process". We start with the learning objectives for building requisite functional expertise in cash management process.
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