Kamal Lidder Explains the Importance of Cash Management

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 Kamal Lidder Describes What is Cash Management
 and Why  It Important?
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• Kamal Lidder says Cash is the lifeblood of any
  business. Without proper cash management, a
  company can quickly run into financial trouble.
  Kamal Lidder explains Cash management is the
  process of managing a company's cash flow to
  ensure that it has enough funds to meet its
  obligations and achieve its financial goals. In
  this article, we'll discuss what cash management
  is, why it's important, and how it can be done
  effectively.

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What is Cash Management?

• He says Cash management refers to the process of
  managing a company's cash inflows and outflows to
  ensure that it has enough cash to meet its
  short-term obligations, such as paying suppliers
  and employees, while also maximizing its
  long-term financial goals, such as investing in
  new equipment or expanding its operations.

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Why is Cash Management Important?

• Kamal Lidder says Cash management is important
  for several reasons. First, it helps a company
  maintain liquidity. Liquidity is the ability to
  meet short-term obligations as they come due. By
  managing cash inflows and outflows, a company can
  ensure that it has enough cash on hand to meet
  its obligations and avoid defaulting on loans or
  missing payments to suppliers.

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Forecast Cash Flows

• One of the most important aspects of cash
  management is forecasting cash flows. This
  involves estimating the amount and timing of cash
  inflows and outflows over a given period,
  typically a month or a quarter. To forecast cash
  flows, a company must have accurate and
  up-to-date financial records. It should also
  consider factors that could affect cash flows,
  such as seasonality, economic conditions, and
  changes in customer behavior.

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Monitor Cash Balances

• Monitoring cash balances is another critical
  aspect of cash management. A company should track
  its cash balances daily to ensure that it has
  enough cash on hand to meet its obligations. This
  can be done using a cash flow statement, which
  tracks cash inflows and outflows over a given
  period. If a company identifies a cash shortfall,
  it should take steps to address it immediately.
  This might involve reducing expenses, increasing
  sales, or borrowing money.

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Manage Accounts Receivable and Payable

• Managing accounts receivable and payable is
  another important aspect of cash management. A
  company should strive to collect payments from
  customers as quickly as possible and pay
  suppliers on time to avoid late fees and interest
  charges.
• To manage accounts receivable effectively, a
  company should send invoices promptly, follow up
  on overdue payments, and offer incentives for
  early payment. To manage accounts payable, a
  company should negotiate favorable payment terms
  with suppliers, monitor payment due dates, and
  prioritize payments based on urgency.

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Conclusion

• According to Kamal Lidder cash management is a
  crucial aspect of any business's financial
  operations. By effectively managing cash inflows
  and outflows, a company can maintain liquidity,
  reduce borrowing costs, improve financial
  performance, and avoid financial distress.
  Strategies such as forecasting cash flows,
  monitoring cash balances, managing accounts
  receivable and payable, and investing excess cash
  can all contribute to effective cash management.
  Business owners and managers should prioritize
  cash management as a key part of their overall
  financial strategy to ensure the long-term
  success of their company.