Liquidity Management: why real‑time software is essential
Businesses are facing tough new liquidity challenges. Agicap's 2025 survey revealed that 57% of small to medium-sized businesses in the UK are facing increasing Days Sales Outstanding. Customers, in other words, are taking longer to pay up - which means businesses are under more pressure to cover their immediate costs and financial obligations.
What's more, businesses know liquidity is always fragile, however robust it appears. There's always the possibility of another Black Swan event - ie. an unexpected catastrophe - to match the Pandemic.
As the European Association of Corporate Treasurers observes, "the COVID-19 crisis has illustrated the value of liquidity and risk management" in no uncertain terms.
What liquidity management is and why it matters
Liquidity means a firm having enough funds to fulfill its financial obligations.
Liquidity management: meaning
Liquidity management means monitoring a firm's funds and optimising them using liquidity tools (like cash forecasting and AP/AR automation). Ultimately, liquidity management boils down to picking the right software.
Treasury liquidity management vs. asset management liquidity
Different software handles treasury (cash) liquidity and asset liquidity:
Treasury liquidity management centres on ensuring that businesses keep going. The focus is on ensuring operational continuity through real-time cash visibility, managing cash inflows/outflows (via efficient, automated Accounts Payable and Accounts Receivable modules) and mitigating payment delays/cash shortages through accurate cash forecasting. Software that is specifically designed to tackle these tasks like
Agicap is ideal when the focus is on cash liquidity.
Asset management liquidity focuses on investments rather than cash. Good asset management liquidity means that assets owned by businesses like bonds and stocks can be easily converted to cash. This is the realm of portfolio risk - distant from everyday cash liquidity. While software like Agicap supports investment planning through identifying available liquidity to make investments, specialist softwares like Morningstar Direct and Bloomberg Terminal are better suited for specific asset liquidity analysis.
Why liquidity is now a CFO-level priority
Cash is more than a buffer that companies need to stay afloat; cash is a strategic asset. We can divide C-Suite attitudes towards liquidity into 3 distinct historical periods:
Pre-2008: liquidity was handled by junior staff. Overdrafts were relied upon (an approach to liquidity management which would not pass stress tests nowadays!). CFOs prioritised profitability.
Post-2008: the financial crisis of 2008 highlighted how important liquidity was. Firms without it failed. Over the 2010s, software evolved like Agicap that could offer CFO liquidity levers, oversight and automation.
2020s: liquidity is confirmed as a C-Suite priority after a succession of negative macro events (COVID-19, high inflation and the Ukraine conflict).
From survival to strategy
Businesses staying afloat is the basis of liquidity. And excellent liquidity management moves a company on from surviving to thriving. With a firm grip of liquidity, businesses can make strategic decisions with confidence. For businesses that want to plan ahead, moving from spreadsheets to dedicated cash software like Agicap can be a vital step.
Simon Rauturier, CFO of the Plenetude Group, testifies that "Agicap has allowed us to make the right decisions with much more confidence than managing our cash flow on Excel." The Plenetude Group leveraged Agicap to revolutionise their liquidity with a reduction in DSO (Days Sales Outstanding) of 20 days.
How liquidity and risk management work in practice
Liquidity is typically on page 1 of a company's risk register; of all risks to manage, the danger of a business running out of money is the biggest threat imaginable.
Liquidity risk management tools
Probably the most effective tool in liquidity risk management is a senior management team and overseeing Board that makes liquidity a priority.
In practice, that means empowering the CFO with the right incentives and software to provide a 360 degree view of a business's liquidity at any time. Managing risk so often means monitoring the risk; it's all about visibility.
Real-time cash visibility & forecasting
Strong liquidity management software prioritizes the centralised, real-time view of a firm's cash position. This is what CFOs crave: immediate visibility of liquidity levels.
And next up on a CFO's wish list: visibility of what those liquidity levels are going to look like over the short, medium and long-term - cash forecasting. Software typically uses historical as well as live data in conjunction with AI to project future liquidity over different time horizons.
And yet, in practice, an Agicap survey of 2025 found that a staggering 43% of US mid-market companies depend on unreliable cash flow forecasts, as well as experience unexpected shortfalls of more than $50,000 every 20 days!
Optimizing accounts receivable and accounts payable
Huge levers that CFOs can pull when it comes to liquidity is the automation of cash collection (accounts receivable) as well as the tracking of payments going out (accounts payable).
Automating cash collection is a central feature of liquidity software - aimed at reducing late payments and speeding up collections generally. This boosts liquidity in the most direct way possible, by accelerating cash inputs. On the accounts payable side, businesses don't want to be pouring money out the door too fast - that's for certain. But tracking payments that a company makes definitely boosts liquidity oversight, because it reinforces the accuracy of cash forecasting.
The upside of liquidity management: example
Of course, if liquidity is handled judiciously, there is a positive result for CFOs - and that is excess cash. French waste production experts Ecophyse are one of many Agicap clients whose strategic use of excess cash has been revolutionised - by first getting their liquidity straight using Agicap.
Join our masterclass on excess cash management with independent treasury expert Simon Jones.
Top liquidity management solutions: Agicap
Amongst treasury management systems, Agicap stands out as a cash specialist. Our vision is to help companies better manage their cash and improve their cash performance. That makes us liquidity specialists, too. From ensuring survival to seizing growth opportunities, cash liquidity must be at the centre of any business.
Agicap's product features directly address liquidity issues:
Integrated data sources for clear liquidity oversight
Arguably the most important part of liquidity management is knowing what the cash situation is right now. This is only possible if all parts of the cash machine that makes up your company are connected into one unified platform. Hence Agicap prioritizes integration:
Data from banks: aggregated bank data ensures that Agicap's eye-in-the-sky has a live view of your firm's finances. Agicap leverages numerous bank protocols, including EBICS, PSD2, SWIFT, EDITRAN and host-to-host.
ERP & accounting data: quotes, purchase orders, invoices - they all feed Agicap thanks to our multiple data integration protocols including API, PublicAPI, File Transfers, SFTP etc.
Data from other business tools: for specialist spend management tools (like Spendesk), payment solutions like Stripe, file storage and of course spreadsheets - using an API, Agicap connects many such business software packages automatically.
Consolidated data & personalized dashboards
Consolidating this financial data is critical; not only across different types of data streams, but across separate business entities too. Before using Agicap, the multinational Wyz Group was not alone in finding liquidity oversight challenging and laborious; "we had to go to each of the bank accounts and detail which large customer had paid or not," explains CFO Joëlle Guirard, "it was extremely complicated on a daily basis to manage."
Luckily Agicap is set up so CFOs can not only integrate data from multiple group entities, but switch with literally a click from a subsidiary view to a consolidated group view; from granular detail to big picture in seconds.
For the live liquidity picture of any company to be accurate, all data streams need to be simplified and summarised. So Agicap is big on personalised dashboards, which users can set up in a few clicks and share. A big bonus here is our mobile app, where stakeholders can monitor key company indicators like current balance, main payments coming in and going out, metrics like DSO (Days Sales Outstanding) and DPO (Days Payable Outstanding).
Cash flow planning and forecasting
Second only to a live overview of liquidity is an overview of future liquidity. And we're not talking about a crystal ball. We're talking about cash flow forecasting. Accurate. real-time. State-of-the-art. Knowing what cash highs and lows are coming is the key to liquidity management:
Thorough reconciliation of bank accounts and AP/AR data = high accuracy forecasting.
Use your P&L statement as the basis for long-term cash forecasts with Agicap's custom convertor.
Tweak your forecasts to imagine different scenarios - then present your overview to colleagues with custom onscreen dashboards you can set up in a few clicks.
Automation of AR/AP processes
Monitoring liquidity is important. But so is optimising the cycle of payments in and out on which liquidity is based. That's why Agicap features fully-automated Accounts Receivable (AR) and Accounts Payable (AP) processes.
Get paid with CashCollect and reduce your DSO. Centralize your invoices and streamline payments to suppliers with Agicap Spend Management. Both Agicap AR and AP feed into Agicap' central cash flow dashboard to give real-time liquidity visibility.
Client case study: Agicap liquidity management software
Online travel moguls SmarterTravel used Agicap to get a grip on their cash management. With the firm's business model involving a fragmented payment cycle as well as thin cash liquidity buffers, Finance VP Sayanthan Bhowmick wanted to reinforce the security of operations with some reliable cash forecasts.
But Excel wasn't up to the job. And no company could build him a bespoke model for a reasonable price.
So Bhowmick chose Agicap - and immediately reduced the time he spent on cash flow planning from 6-8hrs a week to 15 minutes a day.
"The key benefit of the Agicap platform is you're going to have a full 360 degree transparency of your cash flow situation. You will have the clear understanding of how you're spending money, how you're making money and how long your runway is." (Sayantan Bhowmick, VP of Finance at SmarterTravel)
Activate an easy-to-use demo of Agicap for free.
5 practical ways to improve liquidity
Establish the landscape of your company's liquidity needs by aggregating all relevant data inflows and outflows (from banks, ERP and AP/AR)
Ensure AP/AR are automated to accelerate payment cycles
Use cash flow forecasting to identify potential liquidity problems before they become unmanageable
On key balances, set liquidity alerts
Follow a weekly schedule of liquidity appraisal
Conclusion
"In an era of persistent economic uncertainty and market volatility, the age-old wisdom of maintaining a healthy cash buffer ... is no longer a complete answer to effective liquidity management." (globaltreasurer.com)
CFOs need a birds-eye view of cash, and plenty of cash levers to pull. This is possible with dedicated software like Agicap, but not so easy with treasury management platforms that try and do everything. Agicap is an example of software that keeps it simple. For Agicap, cash is king. And this means liquidity management is the number one concern.
FAQs
What is liquidity in financial management?
Liquidity in financial management often refers to the liquidity of assets. By contrast, liquidity in treasury management often refers to the liquidity of cash.
What does managing your liquidity mean?
Managing liquidity means managing liquidity risk. Liquidity risk is the danger that companies will not be able to cover their financial obligations.
What is the theory of liquidity management?
Managing liquidity is based on the theory of 4 key liquidity ratios:
Current ratio = assets/liabilities
Quick ratio = (assets - inventory)/liabilities
Cash ratio = (cash + equivalents)/liabilities
Operating Cash Flow Ratio = OCF/liabilities
How can you improve liquidity?
One of the best ways to improve a firm's liquidity position is to acquire software that is specifically designed to handle it, like Agicap.
What liquidity management certification can I get?
Key certifications for financial professionals in this area include Certified Treasury Professional (CTP) granted by the global Association for Financial Professionals (AFP) and, offered by the UK's leading treasury body ACT, Certified International Treasury Manager (CITM).
