Cash Management Key Terms

Find the right cash management options for your business

By Nikki Davis

Having a firm grip on your cash management strategy will help you keep a cash reserve in case of need. The need may be an emergency or it may be a large purchase with a price that is too good to pass up, but either way the funds will be available for use. The first step involves maximizing your cash flow. You will also start building up an emergency nest egg by putting it into a fund that earns interest but is still accessible in times of financial crisis. As your business begins to grow and payments become predictable, investing in certificates of deposit with staggered maturity dates becomes an option. There are many other options available, and speaking to your local bank cash management department can help you figure out which ones are right for you. Learn more about the following cash management key terms: cash flow, projections, key financial ratios, profit-and-loss projections, disbursements and cash resource optimization.

Cash flow

Your cash flow is your profit and loss affected by your accounts receivable, your inventory, your accounts payable and your capital expenditures, as well as what you have borrowed.
Try: Learn more from Inc on how to define cash flow.

Projections

Cash flow projections are a forecast of your anticipated cash needs. Use projections to look at your short-term and long-term goals.
Try: Learn about short-term, long-term annual and long-term strategic projections from Small Business Notes.

Key financial ratios

The key financial ratios for your business are the ratios that help you make sense of the figures from your financial statements.
Try: Use the tools from American Express to learn about ratio analysis basics. Spot financial patterns that may damage your business before they can hurt your company.

Profit-and-loss projections

Profit-and-loss projections are long-term forecasts for your business.
Try: Read out about a three-year, profit-and-loss projection from BNET.

Disbursements

Disbursements are your company's payables and cash outflow. There are a variety of products and services available to help you manage the money flowing in that direction.
Try: Look at the variety of disbursement options available through TD Banknorth.

Cash resource optimization

Cash resource optimization is making the most of the available money on hand by using short-term investment solutions to give you interest on the funds that you have.
Try: Check out the cash resource optimization options from BMO Capital Markets.