Cash management is all of the cash-related doings in a business: collecting cash, spending cash, investing cash, counterfeiting cash, etc.
Good cash management means it's done efficiently, allowing the business to run itself in a financially stable manner with all the i's dotted and t's crossed...all the lawyers happy and peppy and certain that they'll get paid their usurous fees.
Why does this hoary topic even matter? Because companies often have tons and tons (and tons) of cash...and debt. And the difference of half a percent in returns from investing that cash is often a big needle-mover in the scheme of things. See Money Market and Commercial Paper.
If nothing else, the goal of cash management is to remain solvent, meaning the company can pay for all of its long-term obligations. After that, cash management can be used to increase profitability and keep the company stable when facing unexpected expenses. That’s how teasuries do.
Related or Semi-related Video
Finance: What is a Money Market Fund?80 Views
finance a la shmoop. what is a money market fund? isn't it a strange concept
to think about going to a market to buy money? [man walks through grocery store]
well yeah it's strange but the practice exists and it's a huge multi trillion
dollar market today. the key word here is money and not investment. why such a big
diff? well because the notion of investing implies duration. that is when
you invest in a nice fixer-upper home or a tractor distribution company or shares
in a fat dividend-paying bank you're investing for presumably a long time [people stand in line]
like years maybe decades maybe centuries if you can find the right miracle pill.
but here we're talking about money like the stuff you can buy candy with. so it's
short term not long and a money market fund basically comprises many series of
pretty safe bonds that are all coming due in the next 30 to 90 days. sometimes [pie chart]
longer than that sometimes shorter but generally in the very near future. so why
would you care about a money market fund? well because it pays you slightly more
interest on your money than say a bank checking account. and lots of people in
corporations need cash just sitting around to pay their bills, so there are
tons of money market funds out there available and that's the gist of a money
market fund. we're sure you'll have plenty of experience with them by the
time you hit your sixth hundredth birthday day [people cheer and hold birthday cake]
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