Liquidity Management
Liquidity management refers to the process of ensuring that an organization has enough cash or liquid assets to meet its short-term obligations. This involves monitoring cash flow, forecasting future cash needs, and maintaining a balance between incoming and outgoing funds. Effective liquidity management helps prevent financial difficulties and supports operational stability.
Organizations often use various tools and strategies for liquidity management, such as maintaining a cash reserve, utilizing credit lines, and investing in easily convertible assets. By managing liquidity effectively, businesses can respond quickly to unexpected expenses and capitalize on opportunities without jeopardizing their financial health.