What is liquidity buffer in SAP FS-LRM - Liquidity and Risk Management?

SAP Term: liquidity buffer

• Component: FS-LRM

• Component Name: Liquidity and Risk Management

• Description: Stock of liquid funds.

Smart SAP Assistant

• Key Concepts: 
  A liquidity buffer is a financial tool used to manage liquidity risk. It is a reserve of funds that can be used to cover unexpected cash flow needs or to meet short-term obligations. The liquidity buffer is part of the SAP FS-LRM Liquidity and Risk Management component, which helps companies manage their liquidity and risk. 
  
  How to use it: 
  The liquidity buffer can be used to cover unexpected cash flow needs or to meet short-term obligations. Companies can set up a liquidity buffer by setting aside a certain amount of money in a separate account. This money can then be used when needed, such as when there is an unexpected cash flow need or when there is a short-term obligation that needs to be met. 
  
  Tips & Tricks: 
  It is important to regularly monitor the liquidity buffer and ensure that it is adequately funded. Companies should also consider setting up multiple liquidity buffers in order to better manage their liquidity risk. 
  
  Related Information: 
  The SAP FS-LRM Liquidity and Risk Management component provides companies with the tools they need to effectively manage their liquidity and risk. It includes features such as cash flow forecasting, liquidity planning, and risk management.