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Explain Cash Management

Cash Management: Cash Management is the management of cash balances of a concern in such a way as to maximize the accessibility of cash not invested in inventories or fixed assets and to ignore the risk of insolvency. According to Keynes there are three main motives for holding cash: the transactions motive, precautionary motive, and the speculative motive. The most helpful method of cash management is the cash budget.

In common, small businesses do not always contain the capability to acquire the credit they might require. They encompass to rely more on their own money to meet expenditures. Even in a big business, the costs might come up which are not estimated. Being unable to handle such situations puts a company at risk for loss of revenue or, in the most horrible case scenario, going out of the business.

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