Liquidity is essential. So you can take opportunities. Act and react quickly. And handle financial challenges with ease. Clever liquidity management forms the backbone of corporate finance and is critical to long-term business success.
With a fully transparent overview of your liquidity at all times, you can ensure that you are flexible and agile. This means more than just securing liquidity by controlling, planning and monitoring incoming and outgoing payments. Companies with sufficient liquidity can also invest their funds in a structured manner in the short, medium and long term – and even generate interest income.
Our toolkit for your liquidity management
Comprehensive liquidity management is built on three pillars:
1. Payment transactions
To ensure optimal payment transactions, we analyze your company’s value chains and financial processes with a view to optimizing your incoming and outgoing cash flows. Supported by our tailored solutions for payment transactions, this stabilizes your cost structures and increases your internal financing strength.
2. Cash pooling
Companies are complex entities and often have numerous accounts. This sometimes means that unutilized funds sit in one account while another account slips into the red and incurs overdraft interest. Cash pooling bundles the balances on your business accounts in Germany, lowering your costs and increasing your liquidity.
3. Liquidity account
In addition to the business account, LBBW offers a liquidity account with an attractive, near-money market interest rate for investing surplus liquidity. The liquidity account is a pure investment account for legal entities that gives you fee-free account management and daily access to your deposits.
Lower risks with clever liquidity planning
Good preparation is the key to dealing with unwelcome surprises – from a sudden need for investment to exchange rate fluctuations and volatile commodity prices. Good liquidity management can help you to organize your funds and payments so that you have the cash you need, when you need it. And optimizing your payment terms can increase your liquidity even further.
Liquidity management is about far more than just short-term financial housekeeping. LBBW’s experts make a distinction between operating liquidity – cash funds that are permanently available – and strategic liquidity based on liquidity indicators like cash flow, capex and financing. When your liquidity reserves have an optimal maturity structure, your company assets can generate solid returns. There are various investment opportunities for companies’ liquid funds, from equities, currencies and bonds through to commodities, money market funds and derivatives.
The amount of liquidity that is required, when, and where – these are factors that vary from company to company and season to season. However, the core tasks of liquidity management are always the same: individually monitoring the current liquidity status, and preparing the short-term liquidity forecast and medium and long-term liquidity planning. Clever liquidity management means being ready for every eventuality!
Do you have questions? Contact us!
