Actively shaping the liquidity management of the future

Companies increasingly want to reduce their dependence on banks and are coming to see liquidity as a valuable factor that should not merely be observed but actively shaped. Because the fact is: increasing the value of a company through liquidity management is possible – and worthwhile.

Gone are the days when business success was measured solely in revenue and profit. Why? Because a company’s cash flow and liquidity are increasingly decisive for how banks (and the financial markets) assess it. At the same time, entrepreneurs are striving to reduce their dependence on banks: in the event of a liquidity surplus, for example, they can use their funds to finance suppliers – instead of entrusting them to a bank as an investment. This is why a company’s liquidity is now regarded as a resource in its own right, one that – like every resource – should also be used to increase the value of the company. But how?

Because be warned: liquidity is a scarce resource! Studies show that small companies in particular have only a thin liquidity cushion to fall back on. It is therefore clear that liquidity is not just a resource to be managed passively, but one that should be managed deliberately and actively. Only with individual cash and liquidity management can companies sustainably derive added value from the resource that is “liquidity”.

Actively managing and planning – really with Excel?

Many companies use the MS Office tool Excel for all sorts of purposes – including financial planning. Yet Excel is an incredibly rigid application, one that was never built to capture processes as dynamic as cash flow and liquidity management. And the question always remains whether the transferred data is even correct! Was a mistake made? Did the import work? A genuinely good Excel spreadsheet is an extremely time-consuming thing, because it is manual, and on top of that highly prone to error.

Using Commitly effectively

To actively manage a company and its liquidity, you need a continuous and, above all, up-to-date view of every change and every deviation from the liquidity plan. Because these are the signs that it is time to act – liquidity therefore has to be managed independently. In Commitly you can see immediately which planned item has been exceeded, which expenses are coming up for the company in the next few months, which investments are planned and which income can be expected in future. All of it neatly categorised and, thanks to the connected bank accounts, absolutely error-free and always up to date.

Credits: Photo by Werner Du plessis on Unsplash