Cash Management Goals and Motives

[Suba]

When we manage business finances, the goal is not to accumulate as much cash as possible, but rather to determine the ideal amount of cash for a business so that operations can run smoothly. There are several goals of cash management, such as:
1. Maintaining Liquidity
2. Optimizing Fund Use
3. Minimizing Operational Costs
4. Supporting Faster Decision-Making
5. Maintaining and enhancing business reputation and third-party trust.

Besides these goals, cash management also has several motives, such as:
1. Transaction Motive
2. Precautionary Motive
3. Compensating Balance Motive to maintain relationships with financial institutions.
4. Speculative Motive

 

[Fidelia]

Good cash management can ensure that there is no disruption to the flow of production because raw materials can be procured on time.