Cash flow management is a process that involves collecting payments, controlling disbursements, covering shortfalls, forecasting cash needs, investing idle funds, and compensating the banks that support these actions. Because global cash management is highly tax and accounting oriented, close working relationships with tax and accounting staff are vital. In addition, cash flow management requires coordination between treasury and operations. And in today's volatile markets, it requires powerful electronic tools for gathering diverse financial information and formatting it into useful reports for decision making.
Cash flow management can be practiced to a point where every available dollar is at work either covering payment of checks or producing income. And while cash flow management continues to be a complex process -- and increasingly so on the international level -- there are a number of sound practices that high-performing companies employ. A discussion of the best practices used by leading companies to effectively manage their cash flow follows.
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