Cash Management Strategies
1. Cash Sweep Accounts: Using cash sweep accounts to automatically transfer excess funds to interest-earning accounts maximizes returns on idle cash. A sweep account is a bank account that transfers funds that fall short of a certain threshold or surpass it, into a higher interest-earning investment option, at the end of a day.
2. Employee Training and Awareness: To foster a culture of cost-consciousness and cash responsibility within the organization, training and educating employees on the importance of cash management and their role in optimizing cash flow becomes necessary. Training of the personnel will improve efficiency and funds of the company can be utilised in a better manner.
3. Centralized Cash Management: This includes consolidation of funds into a master account for efficient management. Centralizing the cash system will have better control and visibility over cash positions. It will also help to keep track of funds in a better manner.
4. Technology Integration: Leveraging technology for electronic payments, online banking, and cash management systems will save time and introduce ease of doing business. It encourages automation of various tasks that helps companies to become more efficient with their resources.
5. Short-term Investments: Short-term investments are those which can be easily converted into cash. These are also known as cash equivalents. Investing in short-term instruments helps in generating funds which helps in maintaining liquidity and cash reserve.