Today, most businesses face many challenges just to ensure effective cash management. From increasing account visibility and control to managing information and risk, business need to understand how these things work. These concerns are addressed through the optimisation of liquidity. With the goal of enhancing their working capital efficiency to encourage business growth, organisations need to take advantage of scalable solutions while keeping in mind their specific needs.
Taking advantage of liquidity management solutions is definitely a smart move. Take note that different financial institutions offer these solutions, but you should go with one that will help you define a solution that is customised to your business, allowing you to optimise various processes, improve decision making strategies, as well as raise your treasury efficiency. These things should be your top consideration.
Strengthen your credit profile by following strict loan covenants as well as giving lenders the assurance that you’re capable of repaying loan debts. After this, you improve your liquidity ratio, covering current ratio, quick ratio, as well as times interest earned. Next, you apply liquidity management techniques such as notional pooling and interest optimisation.
Finally, you demonstrate that you can manage your working capital well, improving accessibility to both inside and outside funding as well as allowing external funding in cases where it’s really needed.
Know the best solution for your business. Cash concentration is of them. It is the physical sweeping of all excess funds, transferring them into just one master account. This works to eliminate idle balances across all of your business’ accounts.
Another thing is the deposit account. With another account separate from your main business account, you can earn a bigger interest on extra cash held there.
Notional pooling is also one solution you should consider. Without defying regulations, notional pooling can be done in just one or multiple currencies to earn interest on the net aggregate while preventing the commingling of funds and intercompany loans.
Lastly, know more about interest enhancement. Regardless of your location or the currency used, this allows you to improve credit interest rates with preferential pricing based on the collective balance in all of your accounts. With these solutions, your business can increase operational efficiency through cash management on a portfolio basis across many markets around the world. You can also ask your bank representative for more about liquidity management solutions.
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