What is the primary purpose of cash management?

The primary purpose of cash management is to optimize the deposit and investment of funds. Effective cash management helps organizations manage their liquidity, ensuring they have sufficient cash flow to meet operational needs while maximizing the returns on surplus cash. This involves not just maintaining an adequate cash balance but also strategically positioning funds in various accounts and investment opportunities that yield better returns.

By optimizing deposits and investments, organizations can enhance their overall financial performance, reduce costs associated with cash handling, and ensure that their funds are working as efficiently as possible. This proactive approach to managing cash contributes significantly to an organization’s financial health and stability, making it essential for effective financial management.