All companies have liquidity risk. Some firms see it as essentially cashflow management, whereas others see it as purely managing the bank account. Liquidity is right at the heart of the risk management concerns of any business. Companies need funds to pay their bills, to pay for the goods that they will turn into finished goods, to pay their staff and to pay for other costs that they incur. These include capital purchase, taxation and bonuses, as well as other more routine costs.
Liquidity planning looks at the expected outflow and inflows that the company is expecting and tries to assess whether there are gaps that need to be addressed. Typically, the assessment looks a bit like this:
| Inflows | Outflows | Net Position ... |
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