FLOATS AND ITS TYPES

FLOATS

Cash float refers to the difference between the cash balance recorded in your accounting system's cash account and the amount of cash showing in your company's bank account balances.

                                                           OR 

Disbursement float occurs when you write a check and the recipient has not yet cashed the check.

TYPES OF FLOATS

1-      Postal float
2-      Lethargy float
3-      Deposit float

POSTAL FLOAT

In that check are received through the post offices and that take tie to deliver the checks from customer to the firm.

LETHARGY FLOAT

Time taking in processing the check within the organization and sending into the bank for re-collection

DEPOSIT FLOAT

Time taking by the bank in collection payments from the customer to bank hardly it took 2 days in clearance. Time should be reduced for effective cash management.

Comments

Post a Comment

Popular posts from this blog

IMPORTANCE OF WORKING CAPITAL MANAGEMENT

Image
IMPORTANCE OF WORKING CAPITAL MANAGEMENT 1-       Continuity in the business operation 2-       Dividend payments 3-       Repayments of long term loan 4-       Increase the reputation of company/ credit worthiness 5-       It boost efficiency and productivity 6-       It will increase the good will of the company 7-       It will help to find competition   EXPLANATION 1-       Working   capital keeps the business operation moving it is needed to purchased raw material to pay the worker and the staff and also to pay the utility expenses 2-       WC needed to pay dividend to shareholder the payments of dividend take place on the yearly or half yearly 3-       WC also used to repay long...
Read more

BONDS AND ITS TYPES

Image
BONDS In finance, a  bond  is an instrument of indebtedness of the  bond  issuer to the holders  . Its an    Long term contract .   Generally issued with maturities in the long term of 20 to 30 years and in short terms 7 to 10 years .    Agreement pay interest + principle amount on specific dates .      It is advertised in the newspaper  .  Offered to general public and investors TYPES OF BONDS 1-      Mortgage bond 2-      Debentures 3-      Subordinated debentures 4-      Income bond   A  mortgage bond  is a  bond  secured by a  mortgage  or pool of  mortgages . These  bonds  are typically backed by real estate holdings and real property such as equipment. In a default situation,  mortgage  bondholders have a claim to the underlying property and ...
Read more

CASH MANAGEMENT PURPOSE AND TECHNIQUES

Image
MAIN PURPOSE OF CASH MANAGEMENT ACCORDING TO COMPANY 1     1-   Collections 2-     Payments MANAGING CASH COLLECTION AND DISBURSEMENTS and TECHNIQUES 1-        Accelerating cash collections/ cash inflows 2-        Slowing down the cash outflows   3-        Controlling disbursement ACCELERATING CASH COLLECTION 1-        Decentralized collections 2-        Prompt payments by the customer PROMPT PAYEMENTS BY THE CUSTOMER In order to accelerate cash inflows the collection of the payments from the customer should be prompt and it is possible by prompt revising or invoices. Quick conversation into cash can also help. Cash flow can be accelerate by improving cash collection process and effective cash collection management. It can be possible if the time taken in deposit ...
Read more