CASH MANAGEMENT
1.0 Background of the Study
Cash management is a marketing term for certain services offered primarily to larger business customers. It may be used to describe all bank accounts (such as checking accounts) provided to businesses of a certain size, but it is more often used to describe specific services such as cash concentration, zero balance accounting, and automated clearing house facilities. Sometimes, private banking customers are given cash management services (1999). It is the discipline of determining realistically the amounts and the timing of inflows and outflows of cash over the meaningful future.
Furthermore, the first step in cash management is knowing the importance of cash in the business. Cash is the backbone that allows the company to stand on its own two feet. Roughly one half of all start-ups go out of business within four years, mainly due to inadequate financial planning in the name of cash management methods. Many businesses cannot be saved, although quite a few could reverse course or bail out with smaller losses if early warning signs are recognized and responded to. A good cash management plan strives to minimize or even eliminate the guessing game of unpredictable events and to make all aspects of the company fully predictable. Using cash statements and forecasts and knowing what to do with these is the first place to look for warnings that the business is at risk. The cash basis method of accounting is the most useful tool for small business cash management because you report an expense when it is paid and you record income when it is received. “E-Payment” is the buzzword to describe a cash management method whereby a company can receive payment by check for goods and services in electronic format and make deposits directly to its bank account instead of by paper check—a very apt method nowadays to strive in the highly competitive, technologically-charged world of business.
2.0 Statement of the Problem
What is the relative importance of managing cash for every organization for optimum utilization of available resource? How could the companies benefit from such a cash management method so that they will continue to grow in 2009 amidst tight credit crisis? What is the best method in cash management?
The achievement of companies effectively managing their cash is the main issue here. What are the preferred methods of corporations in managing their financial issues is critical. Sustainable cash and treasury management would be the key in combating the threats of financial breakdown of corporations and businesses. Cash disturbances that contribute to the interrupted flow of business and eventual decline in financial strategies would be another issue to deal with. Maintaining an open mind and good planning strategy is highly important.
3.0 Research Objectives
The main purpose of this study is to analyze the several activities or events that jeopardizes effective cash management. This research, specifically, purports to determine how these activities affect the businesses and corporations and to distinguish the role of cash flow and profit. This research takes into account the practices that affect cash management methods. The study also seeks to evaluate how the credit crisis slows down corporations and how the economic activity of a country influences good stock markets.
5.0 Research Methodology
This study will use the descriptive type of research. A descriptive research intends to present facts concerning the nature and status of a situation, as it exists at the time of the study and to describe present conditions, events or systems based on the impressions or reactions of the respondents of the research (1994). It is also concerned with relationships and practices that exist, beliefs and processes that are ongoing, effects that are being felt, or trends that are developing (1970).
In this study, primary and secondary research will be both incorporated. The reason for this is to be able to provide adequate discussion for the readers that will help them understand more about the issue and the different variables that involve with it. The primary data for the study will be represented by the survey results that will be acquired from the respondents. On the other hand, the literature reviews to be presented in the second chapter of the study will represent the secondary data of the study.
The research will be presented in written form with the addition of data charts which will present the project’s results. Pie charts and network charts will be needed to illustrate some of the analyzed data. This cannot be confirmed, however, until the research data have been analyzed.
Credit:ivythesis.typepad.com
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