How to Enhance Liquidity

Liquidity is the financial power in the hand of company for paying all type of expenses. Not just paying expenses, with high level liquidity, company can easily pay his debt and buy any asset for increasing efficiency.

So, for getting above benefits of high level liquidity, we need to enhance this. Here, we will teach you, how to enhance liquidity fastly. 

1st Step : Check the Current Status of Liquidity

Without checking temperature of body, we can not treat fever. Without checking diabetes, we can not treat diabetes patient. Like this, if we have to enhance liquidity of our company, we need to check the current status of liquidity of company. For this, calculate our all total current assets and then it divide with current liabilities. If  this current ratio is 2 :1 or 3:1, then it is good, if it 0.5 :1 or 0.7 :1, it is low liquidity status which will failure to fulfill financial obligation. For this, we have to take the steps of enhancing our liquidity. 

2nd Step : Earn Interest on Free Fund by Converting it in Fixed Deposit

We all know that we get 4% interest on our saving fund. If there is no use of this fund, convert it into fixed deposit, you will get 9% interest on this fund. It will help you to enhance your liquidity. If there is emergency, you can also break this FD because this is short term investment but give you high rate of interest. 

3rd Step : Decrease Your Expenses 

If you have decided to enhance your liquidity, you have to decrease your expenses. For example, you can decrease your advertising cost by just starting your mouth marketing. You can decrease the transport cost if  use public transport like rail or bus instead of using your own car or other vehicle. Remember, every paid expense will have free substitute, you just find it and use it. I have lots of free online free tool which decrease my expenses to promoting it online.

4th Step : Try to Maximum Use of Your All Assets

You have to try to maximum use of your all assets. Sell your all wastage. It will give you more cash. For example, freeze in your office is making you and your employees unhealthy. Sell it fastly and pay your dues. Recently, I sold all my unproductive assets and increase 30% in my liquidity.

5th Step : Give More Discount to Your Debtors 

When you have done credit sale, you will feel low liquidity, you can enhance it by giving more discount to your debtors, at that time, your account receivables will convert in cash fastly.

6th Step : Get More Discount from Your Creditors

Creditors need money more fastly. Pay fast to them and get more discount from your account payable. Less payment to creditors through getting discount means more liquidity in your hand.

7th Step : Increase Your Profit 

Try to learn the skills of more sales in a day. This is the skill which any human being can learn. There are lots of books which can teach these skills, you just apply them. My best book for learning these skill is the greatest salesman of the world. You must read this for becoming successful salesman. At that time, you can easily solve the problem of low liquidity of your business.

8th Step : Less Personal Use of Your Capital 

Never use your business capital for personal use. Try to use it and you will never face low liquidity because when you will use your business capital, you will decrease your working capital, low working capital will preform less and you will capture in problems. So, enhancing your liquidity just stop to use it for personal benefits. 


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Accounting Education: How to Enhance Liquidity
How to Enhance Liquidity
Accounting Education
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