CASH CYCLE
Involves Two Cycles—Disbursement Cycle and Receipt Cycle
a) Disbursement Cycle—Total time between obligation to pay supplier arises and upto when payment clears the bank. To be maximized.
Three Floats should be maximized to postpone payment
Mail Float- Time spent in mail
Clearance Float- Time spent for clearing payment through bank
Processing Float – Time required for processing payment transaction.
b) Receipt Cycle—- Total time between products or services are provided and upto when payment from customer clears the bank.
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