How the inflow and outflow of cash is linked to the operating cycles of the business? Learn the cash management process in an enterprize and it's key components.
The cash flow timeline includes the total time interval beginning with the first phase of the operating cycle, when resources are purchased, until the last step when receipts are collected.
It consists of 4 basic steps.
1. Material purchases.
Acquisition of raw materials or merchandise for resale includes negotiation of the method of payment, credit terms and trade and payment discounts.
2. Payment for resources.
All resources required to support sales, including labor, marketing and overhead expenses, incur financing costs until cash is collected for sales made.
3. Sale of inventory or services.
Merchandise and other sales are most frequently accomplished by extending credit to customers. The timing of accounts receivable collection is a major focus in cash management.
4. Collection of receipts.
Only when the customer has provided good funds for the merchandise or service does the cash flow cycle conclude for that transaction.
Bank reconciliation process is targeted to validate the bank balance in the general ledger and explain the difference between the bank balance shown in an organization's bank statement. Learn the reasons for existence of differences between the two.
Introduction to Cash Clearing Process
Unravel the mystery behind clearing accounts. Learn why clearing accounts are used in finance and accounting. Learn why so many clearing accounts are defined in ERPs and Automated Accounting Systems.
Suspense and clearing accounts resemble each other in many respects but there exists important fundamental difference between the two. Read more to explore these differences.
What are the various sources of cash in an organization. Which sources increase the cash available with the enterprise and which sources results in outflow of the cash? Let us explore!
In the previous article we talked about the meaning of the account reconciliations. Now as you now the definition of account reconciliation, in this article let us see why it is carried out.
The Cash Clearing process enables you to track amounts that have actually cleared your bank. Till reconciliation happens the amounts are parked in 'Cash Clearing Account'.
Treasury has increasingly become a strategic business partner across all areas of the business, adding value to the operating divisions of the company. Managing activities that were traditionally carried out within the general finance function. Learn about the drivers for this change.
The terms Treasury Management and Cash Management are sometimes used interchangeably, while, in fact, the scope of treasury management is larger and includes funding and investment activities as well. Learn all about Treasury Management here!
So many codes in the lines that are there in a Bank Statement. It contain lots and lots of meaningful information that can help automated many tasks. Explore more!
Account Reconciliation – How? Learn the three key attributes to perfom account reconciliation.
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