ABSTRACT
This chapter discusses the importance of managing cash as an integral part of managing working capital. Cash management ultimately affects the return on investment calculation and assists in effectively using Return on investment as a measurement tool for operating the business. The working capital components is cash and marketable securities. Lockbox services are the most commonly used service to establish convenient and economical mail-collection points for customers who pay by mail. Customers send remittances to designated post office boxes, where local banks collect these checks and deposit them as soon as possible for collection. Preauthorized checks are checks without signature issued by a payee with a prearranged agreement with a payor. The slower mail and clearing processes inherent in this system allow for additional available monies within the cash pipeline of a company by giving the company additional time to use the cash value of checks before the checks are drawn against the company’s account balance.
