How Does A Financial Manager Efficiently Manage Liquidity?

The liquidity question haunts organizations in most manufacturing industries. These are industries that require huge capital infusions to sustain productivity. Margins are low and there could be a sudden liquidity crunch because worker demands are always collectively bargained. If it is not a market leader then negotiating credit terms with suppliers becomes difficult.

To put it in simple words, the best way to manage liquidity is to ensure that you get paid before you need to pay your suppliers. This keeps an organization cash rich because the cash accrues interest before it is handed over to the supplier. This is easier said than done though. The financial manager needs to have a good handle over the nature of the business before he can concentrate on the liquidity issue. He will have to figure out ways and means to keep the cash flow positive and healthy.

A good financial manager is a generalist as well as a specialist.