Cash Management Summary

Topics: Cash management, Management, Bank Pages: 11 (3707 words) Published: August 14, 2011

Cash management is one of the most important function in any organization. The main aim of any organization is to increase profits as well as maximize the wealth of the shareholders. The resultant cash should thus be managed in the best way possible. The following research paper will explore the various cash management theories that are employed in the Kenyan multinational companies whether and whether they have been effective or not. In addition the research paper will also provide informed recommendation on the cash management theories that the multinational companies should apply

Cash management is very important in any organisation. Broadly defined cash management refers to the collection, concentration, and disbursement of cash. The goal is to manage the cash balances of an enterprise in such a way as to maximize the availability of cash not invested in fixed assets or inventories and to do so in such a way as to avoid the risk of insolvency. Factors that are monitored as a part of cash management include a company's level of liquidity, its management of cash balances, and its short-term investment strategies. Managing cash flow is the most important job of business managers. Efficient cash management processes are pre-requisites to execute payments, collect receivables and manage liquidity. Managing the channels of collections, payments and accounting information efficiently becomes imperative with growth in business transaction volumes. This includes enabling greater connectivity to internal corporate systems, expanding the scope of cash management services to include “full-cycle” or cash management services targeted at the needs of specific customer segments. Cost optimization and value-add services are customer demands that necessitate the creation of a mechanism to service the various customer groups. There are several cash management theories that organisation should use in order to be able to perform their tasks in a n effective manner. Failure for an organisation to fully manage its cash properly may make the company to suffer some severe liquidity problems. Eventually it may lead to the company to fail or get into very high debts. During the recent financial recession many companies all over the world collapsed due to poor cash management strategies. A company should choose a cash management theory which it feels that it can easily use. In so doing the company does not risk losing a lot. Background of the study

The research will focus on the cash management theories that multinational companies in Kenya use. Different companies tend to use different theories in managing their cash. This is partly due to the nature of the company and the size of the company. For the sake of this research, five companies will be involved. These companies are 1. Nakumatt

Nakumatt is a Kenyan supermarket chain. Nakumatt is an abbreviation for Nakuru Mattresses. As of November 2010[update], it has twenty-seven (27) stores across East Africa and employs over 4,000 people. It has subsidiaries in Uganda, Rwanda and has plans to enter other East African countries. 2. East African Breweries

East African Breweries Limited is a large East African brewing company which owns 80% of Kenya Breweries, 98.2% of Uganda Breweries, 100% of Central Glass (a glass manufacturer), 100% of Kenya Maltings and 46% of United Distillers and Vintners (Kenya) Limited, 100% of Universal Distillers Uganda, 100% EABL International (responsible for exporting), 100% of East African Maltings, 100% EABL Foundation and 51% of Serengeti Breweries limited. 3. Nation media group

Nation Media Group (abbreviated as NMG) is a Kenyan media group listed on the Nairobi Stock Exchange. NMG was founded by Aga Khan IV in 1959 and is the largest private media house in East and Central Africa with offices in Kenya, Uganda, and Tanzania. In 1999, NMG launched NTV, a news channel in Kenya, and Easy...
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