Page 94 - DCOM505_WORKING_CAPITAL_MANAGEMENT

Dilfraz Singh, Lovely Professional University
Unit 6: Managing Collection and Disbursement of Working Capital

Unit 6: Managing Collection and Notes
Disbursement of Working Capital

CONTENTS
Objectives
Introduction

6.1 Disbursement and Follow Up of Working Capital Finance by Bank
6.1.1 Concentrating Banking
6.1.2 Speeding Collections
6.1.3 Collection Time in the Banking System

6.2 Controlling Disbursements
6.2.1 Determining the Appropriate Working Cash Balance
6.2.2 Compensating Balance Requirements
6.3 Finding the Optimal Working Balance

6.3.1 Variability
6.3.2 Uncertainty
6.3.3 Using Mathematical Models
6.3.4 Planning Cash Requirement

6.3.5 Investing Idle Cash
6.3.6 Investment Criteria
6.3.7 Yields
6.4 Summary

6.5 Keywords
6.6 Review Questions
6.7 Further Readings

Objectives

After studying this unit, you will be able to:

Explain the disbursement and follow up of working capital finance by bank
Discuss the controlling disbursements
Know how to find the optimal working balance

Introduction

Managing working capital means controlling the collection, disbursement, and investment of
cash. When it comes to managing working capital, time is money. Business managers must
consider collection time and procedures, disbursement float, positive uses for idle cash including

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