Question

What tools would you use to manage working capital in your organization?

What tools would you use to manage working capital in your organization?

Homework Answers

Answer #1

Tools that would be used to manage working capital in an organization

(1) Credit policy of the company which includes various terms related to credit sales like credit term for credit sales, cash discount to be offered if payment is made within discounted period, factoring of accounts receivables are some of the factors which are considered for effective management of accounts payable

(2) Float management is another way to manage the cash, various kind of floats include collection float, disbursement float etc.

(3) Various inventory management techniques like EOQ, various stock levels, and inventory management techniques like ABC analysis, just in time techniques are used for better management of assets.

(4) Apart from this cash budget, and accounts receivable budgets are prepared to forecast the cash inflows and outflows

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