To carry out a financial transaction, having money is not enough. Resources need to be available in the right currency, market, and at the right time. This availability is what we call liquidity.
A business may need liquidity for very different situations: making a payment, converting Brazilian reais into U.S. dollars, processing a withdrawal, purchasing a digital asset, or settling an international transaction.
The greater the number of transactions and markets a company operates in, the more important it becomes to have access to the resources required for each operation.
In this article, you will learn what liquidity is, how it is used across different industries, and what to consider when choosing a financial infrastructure for your business.
Understanding Liquidity
Liquidity is the ability to turn an asset into cash or use it in a financial transaction easily and within the required timeframe.
In practice, this means having access to the right resource, in the right currency, at the right time.
Imagine a company has US$1 million but needs to pay a supplier in Brazil. Although the company has money available, it still needs to convert those funds into Brazilian reais before making the payment.
That is why assessing liquidity involves more than looking at the balance of an account. It is also important to consider:
Currency: which currency the funds are available in;
Market: where they can be used;
Volume: how much can be moved;
Timing: how quickly the transaction can be completed;
Access: which channels and providers are available.
This distinction is especially important for businesses that operate with multiple currencies or across different countries.
Why Liquidity Matters for Businesses
The availability of funds directly affects a company's ability to carry out its financial activities.
When sufficient liquidity is available, payments, conversions, and settlements can be completed with greater predictability. A limited structure, on the other hand, can make these operations more difficult, especially during periods of higher demand.
This can affect:
payment deadlines;
the ability to perform currency conversions;
financial planning;
business continuity;
customer experience.
Liquidity needs also vary depending on the business model. A company that makes only a few payments has different needs from a platform that processes thousands of transactions every day.
For this reason, financial infrastructure needs to support not only the company's current transaction volume but also its growth plans.
Liquidity Across Different Industries
The need for available funds varies according to the type of operation. Some examples help illustrate how liquidity supports different businesses.
Exchanges and Digital Assets
Exchanges need liquidity to execute trades and conversions between Brazilian reais, foreign currencies, stablecoins, and other digital assets.
A transaction may start in BRL, move through a stablecoin, and end in another digital asset. In the opposite direction, selling an asset may require converting it into Brazilian reais before a withdrawal.
In this scenario, access to multiple liquidity sources can help:
execute conversions;
support different trading volumes;
facilitate deposits and withdrawals;
expand the range of available assets;
make settlement more predictable.
For international exchanges looking to serve the Brazilian market, access to BRL liquidity can also make it easier to connect local users with international markets.
Fintechs and Financial Platforms
Fintechs may need available funds to support services such as accounts, payments, collections, and transfers.
Imagine a platform that needs to process hundreds of payments at the same time. The necessary funds must be available for those transactions to be completed within the expected timeframe.
As the customer base grows, the ability to process these financial flows needs to grow with it.
Betting
For betting platforms, the availability of funds is directly connected to incoming and outgoing money flows.
Users make deposits, use their balances, and may request withdrawals. The company needs sufficient funds to process those withdrawals.
If a platform normally processes 500 withdrawals per day but suddenly receives 2,000 requests, its financial infrastructure needs to handle this increase in demand.
International Payments
International operations may involve multiple currencies and markets.
A company may receive Brazilian reais, convert them into U.S. dollars, and use those funds to pay a supplier abroad. It may also need to make euros available to a partner in another country.
In these situations, access to multiple liquidity sources can help identify the most suitable route for each transaction, considering currency, market, cost, and settlement time.
Payroll and Recurring Payments
Companies that pay employees or contractors in different countries need to move funds in the currencies used in each market.
A structure with access to multiple currencies makes these payments easier to manage and can reduce the need to create completely different financial processes for each country.
Main Sources of Liquidity
The resources used in a transaction can come from different participants and markets.
Depending on the need, financial infrastructure can connect:
banks;
financial institutions;
specialized providers;
trading desks;
digital asset markets;
blockchain networks;
liquidity providers.
Having access to multiple sources can reduce dependence on a single provider and increase the ability to support different currencies and transaction volumes.
For example, a company that needs to convert a large amount of Brazilian reais into U.S. dollars has different needs from an exchange processing thousands of small BRL-to-stablecoin conversions.
A structure with multiple sources makes it possible to choose the most suitable flow for each type of transaction.
Criteria for Evaluating a Liquidity Structure
It is not enough to know how much a provider can move. It is important to understand whether its infrastructure meets the company's specific needs.
Supported Currencies and Markets
Check whether the provider supports the currencies used by the company and has access to the markets relevant to the operation.
Liquidity Sources
Understand where the funds come from and whether multiple providers are available. A more diversified network can provide greater flexibility for different types of transactions.
Processing Capacity
Assess whether the infrastructure can handle the company's current volume and expected growth, including periods of higher demand.
Execution Speed
The time required to execute a conversion, payment, or settlement can directly affect cash flow. For this reason, it is important to understand the expected timeframe for each type of transaction.
Technology and Integration
APIs allow financial services to be connected to a company's systems. This makes it easier to automate activities such as conversions, payments, collections, settlements, and transaction tracking.
Compliance and Security
Financial operations need to comply with regulatory requirements and include appropriate security and monitoring mechanisms. These processes should also be considered when choosing a provider.
Integrated Infrastructure for Different Operations
A company operating across different markets may need several financial services at the same time, such as payments, foreign exchange, settlement, and liquidity. When each component depends on a different provider, the operation becomes more complex and requires teams to manage multiple integrations.
An integrated infrastructure brings these components together and allows them to be connected to the company's systems through APIs. This means processes such as currency conversion, payments, collections, settlement, and transaction tracking can work together in a more connected and automated way.
This model is particularly useful for businesses that move funds across different currencies and markets because liquidity becomes part of the financial flow rather than an isolated resource.
Liquidity and Infrastructure in One Solution
This is where Transfero operates. The company combines access to liquidity sources with different components of financial infrastructure, connecting banks, liquidity providers, payment systems, and blockchain networks.
This structure supports different needs depending on the business segment and type of operation, including:
Exchanges: conversions between BRL, stablecoins, and other digital assets;
Fintechs: payments, collections, and financial transactions;
Betting: deposits, withdrawals, and settlement in Brazilian reais;
International operations: currency conversions and payments in different currencies;
Global businesses: financial transactions across different markets.
In practice, companies do not need to treat liquidity, payments, foreign exchange, and settlement as separate operations. These components can be connected to create simpler financial flows that are adapted to each business's needs.
What to Consider When Choosing a Liquidity Infrastructure
When evaluating a provider, it is important to look beyond the amount of liquidity available. Companies should understand which currencies and markets are supported, which liquidity sources are connected, how transactions are executed, and which processes can be automated.
An infrastructure that combines liquidity and technology can give businesses greater flexibility when they need to make payments, convert, trade, or settle funds across different markets.
Does your company need access to liquidity across different currencies and markets for payments, conversions, or digital asset operations? Talk to our commercial team to learn how Transfero's financial infrastructure can support your operation.
