How to improve the liquidity of a company? Know the key elements

 Having enough cash is of vital importance to reach the level of growth and development desired by a company.

 To advance in an efficient financial planning of any business, it is important to be clear about the concept of liquidity.

 1. What is liquidity?

 It is the power that assets have to be transformed into cash without reducing their value.

 There is no asset with greater liquidity than money.

 There are other terms that are used as "liquid assets" to refer to money and assets that change to cash.

 It should be clarified that liquidity has two dimensions in elements other than money:

 The time it takes for the asset to become money

The degree of certainty with the value and the reason for the conversion

 2. What makes up liquidity?

 For economists, liquidity is the amount of money that is circulating.

 Monetary aggregates are there to manage everything related to the use of resources by companies.

 There are also financial instruments that are added to set the volume of liquid assets.

 3. Risks

 The inability to honor short-term payment commitments by a company is what we call liquidity risk.

 The main variable with which a company works on a daily basis is the estimate of cash that they must have to fulfill their responsibilities.

 4. Internal mechanisms for control

 Without strategies that allow a positive management of liquidity, a policy that helps the company on a daily basis will be necessary.

 There are several measures that could help a lot. Generally they are used for any company, but they also vary from the needs that are sought to be covered:

• Supervision and audit

• Open access to credit

• Implement an appropriate structure for management: administrative council, information system, measurement and monitoring.

• Contingency plans

5. Importance to obtain credits

Not having how to improve the liquidity of a company causes delays in honoring commitments, causes interest to rise, embargoes are established and, in some cases, the closure of businesses.

To guarantee the solidity of a business, it is essential to have good assets, since with them the necessary commitments are achieved to achieve success.

There is no better letter of introduction in a John Labunski financial advisor that the company has good liquidity.