If the company has $5 million per day in collections and $3 million per day in disbursements, how many dollars will the cash management system free up?

The company’s cash management system will free up $2 million per day. This amount is calculated by subtracting the total disbursements ($3 million) from the total collections ($5 million). In other words, of the $5 million collected on a daily basis, only $3 million needs to be paid out in order to satisfy obligations; this leaves an extra $2 million available for other financial activities.

This additional money can then be used in various ways depending on the nature of the organization’s operations and goals. For instance, it may be invested into stocks or bonds to generate more funds through interest payments (which can then either pay down debt or support operational expenses). Alternatively, some companies opt for short-term investments such as money market accounts which offer high liquidity with minimal risk but also provide modest returns.

Additionally, this excess revenue might even cover anticipated costs associated with future projects. For example, if a firm requires certain equipment that is not yet necessary but eventually will be during peak demand times – they may set aside a portion of their surplus funds so that when those items become needed they already have enough money to purchase them without having to take out loans.

Ultimately, proper cash management systems are essential in both private and public sectors because they allow decision makers to maximize their profits while remaining fiscally responsible at the same time. By collecting more than what is actually needed on a daily basis and using any extra capital wisely– organizations can ensure greater long-term success.