Cash Management Paper Essay Example | Topics and Well Written Essays - 750 words

Cash Management Paper - Essay Example When a company is strapped for cash there are various alternatives can be implemented to ensure the company stay solvent for a longer period of time. One of the approaches that can be utilized in cases where there is an imminent cash flow problem is to reduce costs. During the global economic recession that started in 2008 the world has seen how many global corporations have chosen to reduce their payroll expenses through massive layoffs in order to keep the businesses going. The US government created a special bailout package bill for the US automakers because companies such as GM could not keep operating because of cash flow problems. Cash flow problem can also occur due to the inability of a company to collect its account receivables. IF clients are not paying on time the best alternative is to terminate the credit privileges to such vendors. A technique that is utilized by companies to improve its collection function is by utilizing electronic transactions such as direct debit from a checking account. One of the four primary financial statements is called the statement of cash flow. The statement of cash flow is the best anal ytic tool that can be used to manage the cash flow of an enterprise. This financial statement provides an outlay of the cash that is entering and going out of a firm as well as the type of transaction associated with the movement of cash. The three categories that measure cash movement in the statement of cash flow are financing, investing, and operating activities (Besley & Brigham, 2000). Due to the importance of the cash asset of a business there are various alternatives that a company can utilize to obtain cash through short term financing. Short term financing are alternatives that provide a company with immediate cash to be utilized to cover its short term operating activities such as paying payroll, buying materials, maintenance activities among