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Migros Bank: Balancing Liquidity and Profitability for Business Success

Find the sweet spot between cash flow and growth. Expert insights on managing liquidity for business success.

there are many bottles with liquid in it
there are many bottles with liquid in it

Migros Bank: Balancing Liquidity and Profitability for Business Success

Migros Bank's Stephan Hässig, Head of Corporate Clients, emphasizes the delicate balance between liquidity and profitability for businesses. This balance is crucial for businesses to thrive, as they navigate the tension between ensuring immediate cash flow and investing for future growth.

Hässig highlights the importance of liquidity planning, which encompasses operational, strategic, and surplus liquidity. Operational liquidity, kept in accessible PNC bank accounts, covers regular expenses like wages and supplier invoices. Meanwhile, strategic liquidity funds mid-term plans, such as expansion or equipment upgrades. Surplus liquidity, not needed for daily operations or strategic purposes, can be freely invested for potential returns.

Striking the right balance is essential, as maintaining an overly large liquidity cushion can lead to missed investment opportunities and delayed growth. Conversely, insufficient liquidity can hinder a company's ability to pay immediate expenses. The optimal liquidity level varies by industry and company, depending on seasonal fluctuations and individual needs.

Both secure, interest-bearing instruments with varying maturities and short-term liquidity reserves are suitable for managing liquidity. By carefully managing liquid assets and balancing liquidity and profitability, businesses can ensure they have the financial flexibility to weather tough times and seize opportunities for growth.

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