Definition of "cash management"
Cash management is used to monitor and control the inventory of liquid funds, such as cash and sight deposits, unused credit options and financial assets that can be monetized at short notice.
It represents financial management in the context of finance.
- Because of its extensive tasks, cash management requires the use of IT. The financial data must be constantly up-to-date available and evaluable. While in the Financial planning If the amount of the stock is determined, the cash management is used to fine-tune the options:
- Raising capital to get the Cost of capital To minimize the investment of cash and cash equivalents to minimize opportunity costs - as costs for lost profits.
Many credit institutions offer IT services as electronic banking, which also includes cash management. A distinction must be made between:
- Simple cash management systems that provide a wide range of data, e.g. B. Sales, balance overviews, account movements, account statements, reports.
- More sophisticated cash management systems that can also enable standardized transactions as well as liquidity forecasts, risk analyzes and short-term financial planning.
Cash management has become an important tool for companies to control liquidity and profitability. It is part of the management information system