Methods of Cash Management

Cash management-the control of payments, receipts, and any resulting transactions balances-has become increasingly sophisticated over the past decade. High interest rates, rapidly declining real costs of information-processing technology, proliferation of new financial instruments, and a changing regulatory environment all have contributed to a broadened market for cash-management practices that may soon include every small transactor in the nation, no matter how small. The cash-management process continues to have a significant impact on the public’s portfolio holdings and consequently on the structure of financial markets. This impact is perhaps most evident in depository institutions, which have lost some of their share of the market for financial assets despite their offerings of new financial services and more attractive instruments.