Skip to main content

Insights by Cathay

Utilizing treasury management tools to help maximize your working capital

Working capital is a core fundamental for evaluating your business’s health. Well-managed companies utilize their working capital to maintain an even balance among growth, profitability, and liquidity.

The definition of working capital is the difference between your current assets and current liabilities, and it’s the key to your business’s daily operations. Working capital becomes a vital metric for evaluating how efficiently you’re running your company and its level of financial stability.

As you consider how to maximize your business’s working capital, think about how you can remove payment pain points to optimize cash flow. This type of evaluation can help determine the right course of action for your business.


Importance of Liquidity in Business

Managing day-to-day finances can be challenging and time-consuming while simultaneously trying to grow a business. A suite of treasury management solutions gives your business a centralized view to help manage your expenses, cash flow, and operational costs — so you can focus on broader strategic business goals.

Historically, commercial businesses focus on cash flow strategies that allow them to quickly bring in money to the organization and maximize the return on the cash on hand. Enterprises want to extend their payables as much as possible to maximize cash flow. The longer they have money on the books, the longer they can get returns on their cash assets. If businesses have the tools to extend their payables cycle, they have a better opportunity to reach their financial goals.

Bottom line: Strong treasury management solutions empower businesses to control their cash conversion cycle and maximize the amount of cash they have on hand.


How to Manage Excess Cash and Liquidity

Receivables and collection services help businesses accelerate their depository and collection processes. These services provide cash flow management, remote fund deposits, increased customer payment options, and more. Successful businesses utilize an appropriate mix of electronic payment methods, including Automatic Clearing House (ACH), wires, and commercial cards.

Treasury management includes more than just receivables and collection services; it also features payables and disbursement solutions. These services help business owners keep track of day-to-day spending, control their financial outflow, manage their funds more efficiently, and reduce the risk of economic inefficiencies.

Catha’s consultative and client-focused approach is here to support businesses of all sizes. We are a relationship bank and strive to add value to our discussions with clients. Our product suite of treasury management tools reflects that desire and is actively informed by client feedback regarding their specific needs. Contact us to learn more about how we can help today!



Related Links: 

This article does not constitute legal, accounting, or other professional advice. Although the information contained herein is intended to be accurate, Cathay Bank does not assume liability for loss or damage due to reliance on such information.

Share This Article:

Social share image