Literature Review On Cash Management

This chapter is composed of studies and literature related to cash management. This literature was sourced from published and unpublished materials and information gathered from internet sought to give more focus and clarity to the topic.

According to the study of Anton Stigo et al., (2012), cash management also considered management of cash flow whereas the aim is to receive inflows as early as possible and to delay outflows as long as possible without offending additional expenses. Without cash, businesses may not be able to cover current disbursements, which in turn leads to a greater risk of non-payment. Therefore, at the very core of a successful business lies the ability to manage cash flows in an efficient way. From here focus is turned

The findings of this study also indicate that lack of time and resources is an important factor why companies do not pay more attention to cash management practices. Another finding explaining why managers do not utilise cash management practices is that business relations are often given priority over the (in their opinion) small gains of more sophisticated procedures. This is why reminder fees and penalty interest in general are not used, and unfavourable terms may also be accepted if the business relation is likely to generate stable and long-run profits. This of course affects the decision-making process and how cash management practices are applied. In sum, the prerequisites for efficient cash management procedures strongly differ between Company A and

There will be a decrease in the sales of the business if the customer returned the one purchased. Skilled and knowledgeable employees are also responsible for how to interact with their customers while the main function of a business is to do good allocation of cash, their sales and purchases. The inventory cost requires a minimum of cash tied up in stock, since there is often a feeling that having a few stocks in a store for a few months is already a bad practice, which may lead to “out of stock” for some goods. One factor that causes low inventory is: in terms of the space of the store, which is not enough or critical resource which can only be used by at most one process at any one time. Inventory is bought into the business with the intention of resale. The business purchases this inventory on credit due to the lack of cash available. Purchase of inventory is needed for growing sales or for taking supplier discounts by reducing payables early, the money can be used to get discounts from