Collection liquidity

The collection liquidity (EL for short) is an economic key figure and shows the solvency of the entrepreneur . It is the ratio of liquid funds and receivables to short-term borrowed capital.

The formula

${\displaystyle EL={\frac {\rm {fl{\ddot {u}}ssige\ Mittel+Forderungen}}{\rm {kurzfristiges\ Fremdkapital}}}}$

results in the collection liquidity. Their value is usually given in percent. There are the following borderline cases:

• EL is 100%: payment obligations can be met.
• El is less than 100%: payments cannot be fulfilled.
• EL is greater than 100%: probably "dead capital".

Reasons for insufficient liquidity

• Too long payment terms for the customer
• Too short payment terms to the supplier
• Overfilled stock of a company
• The price calculation is not based on the actual costs

Opportunities to increase liquidity

• Shorter payment terms for the customer
• Longer payment terms that could be granted by suppliers
• Accelerated, earlier dunning procedures for customers who can not settle their liabilities within the payment period
• Promotion of sales through advertising

literature

• Josef Nerl: Training Basic Knowledge Realschule 10th grade , Stark Verlag