Cash Managers

Cash managers have an extremely important job in handling the amount of cash that is on hand and making sure that there isn’t an over abundance of cash on hand at any given time. There are important reasons to make sure that there is enough cash on hand to pay any creditors on time, taxing agencies, suppliers, employers, etc. (Porter, Norton 2018). There are two tools that can be used to help to manage cash flows. The first tool is the bank reconciliation. This is a form that is used by an accountant to resolve or reconcile differences in bank statements with the balance show for a particular account (Porter, Norton 2018). The other tool that can be used is the establishment of a petty cash fund. Petty cash is money kept on hand for small purchases in place of writing a check (Porter, Norton 2018).

When looking at the annual report for Lockheed Martin in 2021, it shows total cash and cash equivalents at year end of $3.604 billion. They opened the year with $3.160 billion on hand and their net cash provided by operating activities for 2021 was $9.221 billion. Expenses such as net cash used for investing activities for 2021 was $1.161 billion and $7.616 billion for net cash used for financing activities. A good rule of thumb for businesses is to have enough on hand cash that can cover three to six months of operating costs (Khartit 2022). If you take look at the cash funds used for expenses, keeping around $3.6 billion on hand falls in that range of three to six months worth of expenses.