Page 459 - Business Principles and Management

Chapter
17 Financial Services

17.1 Financial Institutions

17.2 Common Financial Services

17.3 Investing and Investments

RE ALITY CHECK

What Should We Do with the Money?

mong his many duties, Andrew Jones manages the finances for the
rapidly growing Kilgore Kitchens, a distributor of all types of kitchen
A gadgets. During the morning break, he planned to discuss the large
balance in Kilgore’s checking account with Julie Vernon, the company’s
bookkeeper. As they entered the nearby deli, Julie expressed her frustra-
tion in balancing this month’s checking account. Julie said, “Andrew, we
run most of the business’s financial transactions through the checking
account. I spend days trying to keep track of all of the money coming in
from our customers and all the bills we are paying. We need to find a
way to get more efficient with the way we use our money or we will
never know whether we are making a profit or not.”
“You know, Julie,” Andrew commented, “we are a successful and grow-
ing business. When we were younger we had to worry about having enough
money to pay our bills, but over time we have built up a lot of cash. We
should start thinking about how much money we really need in the check-
ing account and what to do with the excess amount of cash we’ve managed
to build up in that account. That is money not working for us.”
“I agree, Andrew,” Julie said. “We make almost no money in a regular
checking account. And I don’t see any upcoming heavy payment drains.
Why don’t we divide the excess between some good short-term and long-
term investments?”
Andrew paused and then remarked, “But we need answers to some ques-
tions first. Where can we put the money and earn the most on it? Is one
bank any different from another? What investment opportunities exist for
short and long time periods? Can we make several investments and still have
enough cash to pay our bills during the year?”
“Andrew, let’s work together on this,” Julie replied. “Can you find time
by lunch tomorrow to do some financial shopping? Then we can sort out
our information and be ready to make a decision.”
“Sounds like the right move to make, Julie. I know you have to go to
our bank to make deposits this afternoon. Why don’t you talk with them
about the options they can provide? I’m going to spend some time on the
Internet gathering information on other investment choices.”
446 Julie nodded her approval. “See you at lunch tomorrow. This could be
just what the business needs.”