Find out everything you need to know about liquid assets as a business owner here. This will help you understand what liquid assets are, where they are on the balance sheet and what you use them for.
What are liquid assets?
Liquid assets are the money that you have readily available in your company. Besides including the cash account, this also includes your business account and your business credit card account. Do you have an account with a payment provider such as PayPal or Mollie? Then its balance will also fall under the liquid assets. Liquid assets also say something about a company’s liquidity. Is the company able to meet payment obligations? Improving liquidity is an investment in the company’s financial health.
Where are liquid assets on the balance sheet?
Cash and cash equivalents are on the assets side of the balance sheet. That means you will see cash on the left and below current assets. It is possible that there are different subcategories, as each liquid asset is listed separately.
What do you use liquid assets for?
Liquid assets can be used for all kinds of expenses. The statement in your business bank account shows how much cash is immediately available to make a payment. For example, to pay an invoice to a supplier or to pay salaries. For example, the cash account allows you to make a cash outlay if the balance is positive.