Cash on hand refers to liquid assets, including accessible balances in bank accounts and credit funds, that are immediately available to individuals or businesses. These assets must be liquid and do not require the sale or transfer of physical or intangible items. Proof of liquid assets may be required by creditors before extending loans or setting fees and interest rates. Monitoring cash on hand is important for managing cash flow and maintaining contingency funds.
“Cash on hand” is a term used to describe the current liquid assets of a business or individual. This includes real cash, as well as accessible balances in checking, savings, money market and other similar accounts. In some cases, available credit funds may also be included. These assets differ from total assets, which also include things like equity in real estate and equipment, and can also include money billed. The amount of cash immediately available to an individual or business can play a significant role in purchasing and credit decisions.
The main point of difference between available cash and other types of assets is the immediacy of access. Funds generally do not need to be physically present at the facility to be considered “available.” As long as the business or individual has access within a fairly immediate time frame, the funds are considered part of this category.
Also, funds considered “cash” do not have to be physical money. Electronic funds, such as those present in bank accounts, also count. Also, funds in credit accounts such as credit cards or home equity lines of credit can sometimes be included, as long as they can be accessed quickly.
Any assets considered part of the available cash must be liquid. This means that it does not require the sale or transfer of a physical or intangible item to access its full or partial value. For this reason, equity in a home, physical items of value, and stocks or shares are not considered “cash” or “available.”
Creditors sometimes require proof of liquid assets before extending a loan or before setting fees and interest rates. In some cases, a certain amount of such funds is required to access credit funds. For example, a person or business looking to purchase a car or real estate is often required to submit a cash advance. In these cases, the available credit is not considered effective because the offer is conditioned on the current credit balance.
Businesses and individuals may also need to monitor cash on hand to manage cash flow. This means making sure there is enough cash or credit available to cover expenses at all times. It could also mean maintaining an adequate contingency fund so unexpected and urgent expenses can be paid for without interrupting business or personal operations.
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