What is cash and liquidity management?

Cash and liquidity management is a big part of treasury management that entails a multitude of tasks, including cash positioning, cash forecasting, liquidity planning, analytics, and reconciliation, in-house banking, generating journal entries for bank transactions, posting transactions to the general ledger and reconciling bank transactions to accounting entries. All of these tasks are necessary to gain clear visibility into an organization’s cash, visibility that is needed to support critical financial decisions and strategic business objectives.

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Optimizing Cash

Visibility into an organization’s cash position, including location, currency and liquidity position is vital. With a timely and accurate picture of global cash across all banks across regions, treasury can create more accurate forecasts  and plan for expanded free cash flow. To properly manage cash and liquidity, organizations need to leverage technology that provides:

• Cash positioning
• Cash forecasting
• Liquidity Planning and Analytics
• Account and Transactional Reconciliations
• In-house banking
• Journal entry generation for bank transactions
• Posting of transactions to the general ledger
• Reconciliation of bank transactions to accounting entries

Cash Management, Forecasting, and Liquidity Planning

With technology, automated preparation and reconciliation of an organization’s daily cash position allows treasury to start each day with a cash position worksheet to visualize cash positions through a combination of bank balances and transactions with expected workflows. Access to this information at the start of the day means that treasury has more time to build and analyze global cash forecasts. And the continued use of technology allows organizations to compare forecasts to actuals for any horizon to help improve forecast accuracy.