Liquidity management refers to the process of managing and monitoring the availability and use of cash and other liquid assets in order to meet a company’s financial obligations and maintain financial stability.
Effective liquidity management involves ensuring that a company has sufficient cash reserves to cover its short-term expenses and debts, while also optimizing the use of its cash resources to generate maximum returns.
Liquidity management involves analyzing a company’s cash inflows and outflows, identifying potential liquidity risks, and implementing strategies to manage those risks. This may include strategies such as maintaining a cash reserve, investing excess cash in short-term, low-risk securities, and establishing lines of credit with financial institutions.
Overall, liquidity management is a critical aspect of financial management for any company, as it helps to ensure that the company is able to meet its financial obligations and maintain financial stability in both the short and long term.