A New Approach to the Management of Cash in a Company

Eleonora Kontuš ()
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Eleonora Kontuš: University of Rijeka

Chapter Chapter 2 in Governing Business Systems, 2018, pp 25-47 from Springer

Abstract: Abstract The aim of the study is, firstly, to analyze the cash balances of companies; secondly, to explore the costs and benefits of cash management; and thirdly, to determine the variables that impact on net savings as a result of establishing a lockbox system and delaying cash payments, and to model the relationships between these variables. The purpose of the empirical part of the study is to demonstrate a correlation between the cash level and liquidity and to explore the dependence between companies’ level of liquidity and profitability. The results of the work include mathematical models for calculating net savings from establishing or changing a lockbox system, as well as delaying cash payments. These results lead to the conclusion that the management of cash becomes easier, as calculations regarding net savings from establishing or changing a lockbox system and delaying cash payments are simplified by using the mathematical models provided. With these, models a company can consider net profitability in undertaking these activities in order to improve its cash position for investments and to improve profitability.

Keywords: Cash balance; Liquidity; Net savings; Lockbox system (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-319-66036-3_2

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DOI: 10.1007/978-3-319-66036-3_2

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