|
What are delay cash payments? What techniques are used for this?
Following are the techniques used to delay cash payments:
1. Payments made from bank which is distant from the bank of the company to which payment is to be made. This increase the postal float and bank float.
2. Attempts made by the company to get the maximum credit for the goods and services supplied to it.
3. Avoid early payments: According to the credit terms available to the company, it is required to make payment within the stipulated period of time. The company should not make the payment before the specified date unless the company is entitled to cash discounts.
4. Centralised Disbursements: Under this method, the payments of the company are made from the central bank account of the head office of the company. This method benefits the company in three respects: Firstly, it increases transit time. Secondly, it becomes easy to maintain minimum cash balance in the central bank account and thirdly, it becomes administratively easy to maintain bank account.
5. Decentralised basis: This method facilitates speedy collections as well as ensures proper control over the disbursements from the bank accounts. As the arrangements are made in such a way that the local branches are authorized to deposit the cheques in the local bank but are not authorized to withdraw the same from there.
6. The company can also delay its payments if it is possible to analyse the time lag in the issue of cheque and their presentation for payment. On the basis of past experience the company may make arrangements for funds only on the expected date of presentation of cheque for payment.
7. Make partial payments or postdated checks.
8. Use charge accounts to lengthen the time between buying and paying for them.
9. Avoid making prepaid expenses.
10. Use computer terminal to transfer the funds between various bank accounts.
|
