How is liquidity maintained through Cash Management?

Maintaining liquidity through Cash Management primarily involves tracking and managing cash flow effectively. This means consistently monitoring incoming and outgoing cash, forecasting cash needs, and ensuring that sufficient funds are available to meet operational needs. Effective cash management allows organizations to make informed decisions about cash reserves, investments, and expenditures, enabling them to maintain a healthy liquidity position.

By tracking cash flow, organizations can identify trends, anticipate shortages, and optimize their working capital. This proactive approach helps prevent situations where an organization might face cash constraints, ensuring that they can meet their obligations and invest in opportunities as they arise.

As for the other approaches, increasing the number of transactions could lead to higher processing costs and complications in cash flow management. Postponing payments might improve short-term liquidity but could ultimately harm supplier relationships or incur penalties. Likewise, manipulating revenue reports undermines financial integrity and could expose the organization to legal and reputational risks, rather than genuinely maintaining liquidity.