Significance of Working Capital Management u u u u u In a typical manufacturing firm, current assets exceed one-half of total assets.

Excessive levels can result in a substandard Return on Investment (ROI). Current liabilities are the principal source of external financing for small firms. Requires continuous, day-to-day managerial supervision. Working capital management affects the companys risk, return, and share price.

Significance of Receivables Management

Significance of Cash Management cash flows into and out of the firm, cash flows within the firm, and cash balances held by the firm at a point of time by financing deficit or investing surplus cash

What Does Working Capital Management Mean?

A managerial accounting strategy focusing on maintaining efficient levels of both components of working capital, current assets and current liabilities, in respect to each other. Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses.
http://www.investopedia.com/terms/w/workingcapitalmanagement.asp#axzz1cF0Kaqsu

What Does Cash Management Mean? The corporate process of collecting, managing and (short-term) investing cash. A key component of ensuring a company's financial stability and solvency. Frequently corporate treasurers or a business manager is responsible for overall cash management. Successful cash management involves not only avoiding insolvency (and therefore bankruptcy), but also reducing days in account receivables (AR), increasing collection rates, selecting appropriate short-term investment vehicles, and increasing days cash on hand all in order to improve a company's overall financial profitability. http://www.investopedia.com/terms/c/cash-management.asp#axzz1cF0Kaqsu What Does Accounts Receivable - AR Mean? Money owed by customers (individuals or corporations) to another entity in exchange for goods or services that have been delivered or used, but not yet paid for. Receivables usually come in the form of operating lines of credit and are usually due within a relatively short time period, ranging from a few days to a year. On a public company's balance sheet, accounts receivable is often recorded as an asset because this represents a legal obligation for the customer to remit cash for its short-term debts http://www.investopedia.com/terms/a/accountsreceivable.asp#axzz1cF0Kaqsu
Objectives of Working Capital Management:
- Deciding Optimum Level of Investment in various WC Assets - Decide Optimal Mix of Short Term and Long Term Capital - Decide Appropriate means of Short Term Financing

1) To make Payment According to Payment Schedule:-

Firm needs cash to meet its routine expenses including wages, salary, taxes etc. Following are main advantages of adequate cash-

1. 2. 3. 4.

To prevent firm from being insolvent. The relation of firm with bank does not deteriorate. Contingencies can be met easily. It helps firm to maintain good relations with suppliers.

(2) To minimise Cash Balance:The second objective of cash management is to minimise cash balance. Excessive amount of cash balance helps in quicker payments, but excessive cash may remain unused & reduces profitability of business. Contrarily, when cash available with firm is less, firm is unable to pay its liabilities in time. Therefore optimum level of cash should be maintain. http://www.mbanotesworld.in/2009/01/objective-of-cash-management.html Objectives of Receivables management Creating, presenting and collecting accounting receivables Establish and communicate the credit policies Evaluation of customers and setting credit limits Ensure prompt and accurate billing Maintaining up-to-date records Initiate collection procedures on overdue accounts