Exercise 6-4 Cash management strategies LO C2 Determine whether each policy below is good or bad cash management; then identify the cash management strategy violated or followed for each policy. 1. Excess cash is used to acquire productive assets or short-term investments. 2. All buildings are purchased, even those the company only plans to occupy for a few months. 3. The company negotiates credit terms with suppliers to delay payment of liabilities as long as possible. 4. Cash receipts and cash payments are regularly planned and reviewed. 5. Customers are regularly allowed to pay after due dates. Cash Management Strategy Good or Bad 1. Good Invest excess cash Keep only necessary assets Delay payment of liabilities Plan expenditures Encourage collection of receivables