Cash Concentration and Liquidity Policy

University of Economics in Bratislava, Faculty of Business Management, Department of Business Finance, Dolnozemská cesta 1/b, 852 35 Bratislava, Slovakia

^* Corresponding author: magdalena.kubranova@euba.sk

Abstract

The purpose of this article is to present how to create an effective payment and collection policy in the corporation. The paper shows defining characteristics and analyses of chosen aspects of corporate payment and collection policy which are the important field in corporate liquidity policy. The rules on payment terms are one of the key factors which are controlled in most contracts involved in businesses. A key treasury task is to collect and concentrate incoming cash as quickly as possible, so that it is made available for operational and investment purposes. The methods used in the solving the problem include analysing the current solution in liquidity policy when many organizations have a large number of highly dispersed locations that collect or disburse cash. This article uses a combination of qualitative and deductive methods. A comprehensive analysis of liquidity policy is also related to cover the details of how to create such a forecast, the reliability of the source information used within it, and how to improve the document about liquidity policy on an ongoing basis.