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which type of factors affecting to cash balances. please reply with detail answer
From India , Ahmadabad

Here is u r answer

Factors of Cash Management

Cash management is concerned with the managing of:

Cash flows into and out of the firm,

Cash flows within the firms,

Cash balance held by the organization at a point of time by financing deficit or investing surplus cash. It can be represented by a cash management cycle (please see the table below). Sales generate cash which has to be disbursed out. The surplus cash has to be invested while deficit has to be borrowed. Cash management seeks to accomplish this cycle at a minimum cost. At the same time, it also seeks to achieve liquidity and control. Cash management assumes more importance than other current assets because cash is the most significant and least productive asset than a firm holds. It is significant because it is used to pay the firmís obligation. However, cash is unproductive. Unlike fixed assets or inventories, it dose not produce goods for sale. Therefore, the aim of cash management is to maintain adequate control over cash position to keep the firm sufficiently liquid and to use excess cash in some profitable way.

Business operation

Cash Collection



Surplus Invest

Information & control

Cash Payment

Cash Management Cycle

Excellent description of cash management by Sanju!!
I would like to add that "Cash Planning" is equally important in managment of cash. Firms need to relegiously follow cash forecasting and prepare preiodical cash flow reports.

From Saudi Arabia , Riyadh
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