If a firm has a temporary cash surplus, it can invest in short-term marketable securities. The market for short-term financial assets is called the money market. The maturity of short-term financial assets that trade in the money market is one year or less.
Most large firms manage their own short-term financial assets, transacting through banks and dealers. Some large firms and many small firms use money-market funds. These are funds that invest in short-term financial assets for management fee. The management fee is compensation for the professional expertise and diversification provided by the fund manager. Among the many money-market mutual funds, some specialize in corporate customers. Banks also offer sweep accounts, where the bank takes all excess available funds at the close of each business day and invests them for the firm.
