CommerceGuard.org is the primary site of the Commerce Accountability Project (CA Project, LLC), an organization dedicated to exposing anti-competitive, anti-labor and anti-consumer practices in industry. We rely on the support of the public to continue our work. If you would like to support us, please consider donating or volunteering. You can learn more about us here.
Glossary
InsuranceFinanceHealthcareEmployment LawPrivacy

Cash Management

Cash management is the process of efficiently managing the flow of cash in and out of a business or individual's accounts to maximize liquidity and ensure that there is enough money available to cover expenses and investments.

Example #1

An individual using automatic transfers to allocate a portion of each paycheck into a savings account to build an emergency fund.

Example #2

A business closely monitoring its accounts receivable and accounts payable to optimize cash flow and take advantage of early payment discounts.

Misuse

One example of misuse in cash management could be a retail bank charging excessive fees for basic services like ATM withdrawals or low balance maintenance. Consumers may unknowingly incur significant charges, negatively impacting their financial well-being. It is important to be aware of fee structures and seek out cost-effective banking options to avoid unnecessary expenses.

Benefits

Effective cash management enables individuals and businesses to have a clear overview of their financial position, avoid cash shortages, seize investment opportunities, and reduce reliance on expensive borrowing. For example, by maintaining a cash buffer, a business can comfortably navigate unforeseen expenses or capitalize on time-sensitive ventures without resorting to high-interest loans.

Conclusion

By understanding and implementing sound cash management practices, consumers and businesses can safeguard their financial stability, capitalize on growth opportunities, and maintain control over their resources.

Related Terms

LiquidityWorking Capital

Last Modified: 4/29/2024
Was this helpful?