Cash management is one of the fundamental factors of business success. Small and large businesses that cannot develop and use effective cash management models will hardly be successful in the global marketplace. As Beesley (2013) says, “cash flow is the lifeblood of a business and critical in its growth.” Therefore, businesses that rely on consumer payments and deposits in their cash management decisions should consider a variety of factors, which can influence their cash flow and, consequently, the bottom line. In this sense, government policies represent an important economic factor and a source of serious influences on cash flow. Government policies can facilitate or impede cash management in business organizations, by reducing the amount of time between product/service delivery and customer payment and by protecting businesses from the risks of defaulted or late payments.
Government policies can impact the cash management strategy adopted by “Precision Machines” in a number of ways. On the one hand, if “Precision Machines” works with government clients and provides the government with products and services, government policies have the potential to accelerate payments for the goods and services obtained from the company (White House, 2011). The faster the payment is provided the better results the company will achieve in its cash management decisions. On the other hand, government policies may provide the company with additional protection against non-paying clients. The U.S. Small Business Administration is a perfect site for any company that experiences difficulties getting its non-paying clients pay for the goods and services they have already bought. Government guidelines and procedures may be helpful in developing a more comprehensive plan for collecting defaulted and late payments (SBA, n.d.). Consumer protection agencies provide qualified support, in case customers go bankrupt or simply refuse to pay the bill (SBA, n.d.). The government may provide recommendations or guidelines for conducting creditworthiness evaluations of every customer, before such credit is granted. Depending on the industry, “Precision Machines” may have to comply with exclusive regulations and enjoy exclusive rights, when collecting customer payments (SBA, n.d.).

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Overall, the success of the cash management strategy adopted by “Precision Machines” depends entirely on how strict the government is towards non-paying clients. At present, businesses assume full responsibility for managing customer payments. Companies are expected to improve their invoicing processes and create the most favorable conditions to speed up customer payments. For example, “Precision Machines” can offer a discount to customers, who manage to pay their bills within 10 days after receiving it. Government policies could change the situation, by making customers liable for late payment or nonpayment. As of today, government is a minor economic factor in companies’ cash management decisions and operations.

To conclude, government policies can have considerable impacts on cash management and cash flows. Late payments or cancelled payments represent the biggest issue in managing organizations’ cash flows. What is needed is the development and enforcement of strict government policies to make customers liable for nonpayment. Otherwise, government policies will keep playing a minor role in cash management decisions.

  • Beesley, C. (2013). Managing small business cash flow – Answers to 10 commonly asked questions. Small Business Administration. Retrieved from commonly-asked-questions.
  • SBA. (n.d.). Extending credit to your customers. Retrieved from
  • White House. (2011). Accelerating payments to small businesses for goods and services. Retrieved from