Willingness to pay (business administration)

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As willingness to pay ( English willingness to pay ) is in the business administration the ability and the will of one business entity called at any time its due liabilities comply.

General

Economic agents include households , companies , other organizations and the state and its subdivisions. However, at times the willingness to pay is limited to companies.

economic aspects

Sufficient liquidity ensures the willingness to pay. An indication of this is provided in the balance sheet by the ratio of liquid funds and short-term realizable assets to short-term liabilities. Examples of liquid funds are cash as well as sight deposits and overnight money at banks ( bank balances ). Assets that can be liquidated in the short term can be fixed-term deposits or other financial investments that are not tied up over the long term . In the case of debts , for example, supplier liabilities or due loan interest and repayments for loans ( debt servicing ) are to be included.

The German legislator, for example, has imposed an obligation on the group of credit institutions in Section 11 of the German Banking Act (KWG) to invest their funds in such a way "that sufficient willingness to pay ( liquidity ) is guaranteed at all times ." He sees willingness to pay and liquidity as synonyms.

A statement about a company's willingness to pay can also be made using the cash flow . The higher the excess of the deposits over the payments in the respective periods, the better it is about his willingness to pay.

In the case of insufficient financial planning, payments can be permanently suspended. The state of insolvency is also known as bankruptcy .

Demarcation

Of the willingness to pay is the solvency ( solvency ) to distinguish. A solvent natural or legal person is able to settle payments due immediately or within a few days. In order to be able to do this, a financial plan is usually drawn up in companies . In contrast to willingness to pay, solvency does not necessarily require the will to want to pay.

literature

Individual evidence

  1. ↑ Verlag Dr. Th. Gabler (Ed.), Gablers Wirtschaftslexikon , 15th Edition, Volume 6, 2000, Sp. 3568, ISBN 3-409-30388-X
  2. ↑ Felix Hornik, Cash Flow: Significance - Methodology - Determination , p. 3
  3. ↑ Verlag Dr. Th. Gabler (Ed.), Gablers Wirtschaftslexikon , 15th edition, Volume 6, 2000, Sp. 3573, ISBN 3-409-30388-X