Top 4 Tips to Successfully Manage Liquidity

Written by Trovata Team
August 17, 2021

If we dust off the history books, we will find that we are nearing the century mark of bank runs that followed the Great Depression. Painful lessons were subsequently learned and new regulations were implemented as safeguards. Banks aren’t the only institutions that suffer when clients want their cash and the till is empty. If their operating cash is empty, then banks cannot meet the needs of their clients. Taking this lesson into account, any company that overspends within their operating account can find themselves in a monumental cash crunch. One root cause can be attributed to the delay in collecting receivables.


Why Liquidity Management Is Critical Component of Your Treasury Management Strategy

Many organizations find themselves trapped in the cycle of inaccurately forecasting their liquidity, leading to them unable to pay their accounts payable. As treasurer, you have the power to uncover your organization; proper liquidity management will help your organization stay on solid footing while waiting for your receivables – especially during an economic downturn. With this in mind, it’s critical that your treasury tech stack empowers you with real-time cash visibility, so you will know ahead of time that a crisis is looming and can calibrate your strategy accordingly.

You shouldn’t be required to walk a tightrope as you try to balance your cash drawer. Determining how much cash to keep on the sidelines for unexpected expenditures isn’t a brazen roll of the dice; it should be done with precision.

Reading yesterday’s reports won’t provide you with the critical insights needed to make more informed decisions. You need to know how much cash is available to pay your vast assortment of bills on time and have the funds to seize an unanticipated short-term investment opportunity before your competitor does; sweetheart deals aren’t always broadcasted months in advance. Managing your liquidity successfully is critical to ensure your organization has the cash on hand to achieve its strategic objectives.


The Art of Balancing Your Cash On-Hand to Achieve Your Strategic Objectives

You and your company must have a comprehensive understanding of how to successfully manage liquidity in order to have the cash necessary to grow the business. This involves judicious oversight into your enterprise’s holdings and financial assets as this insight will help you mitigate the three-prongs of risk management: operational, financial, and reputational. Taking these factors into account, liquidity management ensures your business has enough capital to create a sound framework to remain solvent – while managing risk.  


How to Successfully Manage Your Liquidity

  1. Automate the collection and collation of cash data and transactions. To have a three-dimensional view of your liquidity, you must gather data from your many bank accounts across the globe. Trovata, our automated cash management platform, automates the consolidation and normalization of your transaction and bank data across your many bank accounts utilizing Direct-To-Bank APIs. This direct connection amplifies your cash visibility, empowering you to make faster, data-driven decisions.

  2. Improve cash conversion-cycles. If you resort to manually sifting through accounting data, you run the risk of missing market expanding opportunities. Fortunately, Trovata’s next level bank connections provide up-to-the-hour transactions and cash balance details from every bank account, all-in-one place. With a 360-degree view of your cash conversion cycles, you can be confident that you will have the working capital necessary when short-term investment opportunities arise. 

  3. Perform precise, accurate cash forecasting. Trovata, our cash management platform, empowers you to quickly create personalized dashboards with generated forecasts that paint a picture of your organization’s health. Armed with the ability to deliver succinct and accurate financial reports to management, you can equip your CFO with real-time, accurate insights necessary to make better informed business decisions.  

  4. Remain vigilant of regulatory requirements. Reporting standards and regulations are always evolving, increasing the complexity of your treasury operations. You can strengthen your treasury by ensuring your treasury tech stack stays up-to-date with the latest regulations and standards that the Financial Accounting Standards Board (FASB) and the IRS require. Always being mindful of these regulations in order to reduce risk. 


How Trovata Empowers You to Easily Manage Your Liquidity

Built on modern architecture and Direct-To-Bank APIs, Trovata empowers you with real-time cash insights that drive accurate and quick data-driven decisions. These Direct-To-Bank APIs automatically consolidate and normalize your cash data and transactions into one secure platform, amplifying your ability to report on and manage your liquidity without delay. By automating your cash reporting, analysis, and forecasting with Trovata, you will always have the real-time cash visibility needed to gain a clear picture of your liquidity. 

Trovata makes it easier than ever to monitor, analyze, and automate your organization’s cash workflows, empowering you to:

  • Recapture your time – Direct-To-Bank APIs automatically consolidate and normalize your cash data and transactions into one secure platform, amplifying your ability to report on and manage your liquidity without delay.

  • Gain rich cash insights-  With access to a comprehensive suite of automated, real-time cash reporting and forecasting functionality, you can break free from prescribed reports and discover rich cash insights that drive your business forward.

  • Make more informed, quicker decisions – By automating your cash reporting, analysis, and forecasting with Trovata, you will always have the real-time cash visibility needed to gain a clear picture of your liquidity, so you can quickly pivot your strategy when necessary.

Download Building Tomorrow’s Treasury to gain a 10 step plan on how you can begin to digitally transform your treasury with Trovata.

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