Adjusting The Liquidity Spigot

Overview: The article asserts that new tools that improve balance reporting, funds concentration, cash forecasting and short-term investing and borrowing are taking liquidity management to the next level. Cash is still the king, even though his retinue of human handlers is much depleted since the 1980s. In fact, his influence is currently growing, and he's attracting new respect. Leading treasury thinkers are insisting that corporate cash must be managed better. Banks and third party software vendors are trotting out new tools that aid in such tasks as balance reporting, funds concentration, cash forecasting, and short-term investing and borrowing. Companies are increasingly adopting the philosophy that computers programmed with business rules and a little artificial intelligence best manage liquidity. Overshadowing the great whiz-bang show of high-tech tools for managing liquidity is a somber reassessment of the role of cash in a high-performing business. Companies are no longer assuming that they can tap liquidity at will. Liquidity can be managed better today than in the past because finance executives have better information and more powerful tools. Despite the sophistication of new technologies, liquidity management is a morass of internal politics at many businesses. The biggest obstacle to liquidity management today is a squishy cash forecast. Finance executives can see exactly what they have and exactly what they can do with it, but they still do not know with certainty just how much cash they will need.

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Format: HTML | Date: Oct 2001 | Pages: 5