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Cash management: Methods of short–term investing and financing

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  1. Introduction
  2. Ways of making short-term investments
    1. Passbooks
    2. Shares and bonds
  3. The securities division
  4. Short-term investments
    1. Funding outside the banking system
    2. Financing by the banking system

Short-term investing and financing corresponds to the ready cash available to a company has on hand and in the bank. The objective of liquidity management is to maximize the cash available by limiting losses to the company if it has excess cash, and limiting the amount of premiums to pay if there is a lack of available cash.

[...] Disadvantage: This is an expensive financing method, since banks not only charge interest, but also demand commissions such as the Commission Stronger Overdraft (CPFD) for calculating bank charges. This commission is calculated every month on the basis of the largest overdraft month Financing receivables A company that provides payment terms to its customers may see its cash deteriorate as it takes several weeks or months to collect the amount of sales. To finance the time lag between disbursements and receipts, companies can use several options: o Discounting: This allows existing finance receivables. According to [...]


[...] Disadvantage: They are risky investments with uncertain earnings and there is a risk of losing the initial capital Bonds Advantage: Here there is no risk of capital loss, and a guarantee of some compensation. It ensures a certain level of pay that is specified in the contract. Disadvantage: Bonds pay less as they involve lower risks. C. The Securities Division (TCN) These are financial instruments that give the holder the right to claim on the issuer. They have different obligations because they are issued for a short time, and are usually of duration less than 1 year. [...]

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