"Cash on hand" is a term used to describe the current liquid assets of a company or individual. This includes actual cash as well as accessible balances in checking, savings, money market, and other such accounts. In some cases, available credit funds may also be included. These assets differ from total assets, which additionally include things such as equity in real estate and equipment, and can include invoiced monies as well. The amount of cash immediately available to a person or business can play a major role in both purchase and credit decisions.
The main point of difference between cash on hand and other types of assets is the immediacy of access. The funds generally do not need to be physically present on the premises to be considered "on hand." As long as the business or individual has access within a fairly immediate time frame, the funds are considered part of this category.
Further, funds considered "cash" do not have to be physical money. Electronic funds, such as those present in bank accounts, also count. In addition, the funds in credit accounts such as credit cards or home equity lines of credit may sometimes be included, provided they can be accessed quickly.
Any asset considered a part of cash on hand must be liquid. This means that it does not require the sale or transfer of a physical or intangible item in order to access its full or partial worth. For this reason, equity in a home, physical items of value, and stocks or shares are not considered to be either "cash" or "on hand."
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 in order to access credit funds. For example, an individual or business seeking to purchase an automobile or a piece of real estate must often produce a cash down payment. In these cases, available credit is not considered cash because the offer is conditional upon the current credit balance.
Businesses and individuals may also need to monitor cash on hand in order to manage cash flow. This means ensuring that there is enough available cash or credit to cover expenses at all times. It might also mean maintaining an adequate contingency fund so that unexpected, urgent expenses can be paid without interrupting business or personal operations.
