Which of the following statements about external cash management is true?

External cash management refers to the strategies and practices that organizations use to manage their cash flow and ensure that they have the liquidity necessary to meet their financial obligations. The importance of effective cash management cannot be overstated, as it plays a crucial role in maintaining the financial health of a business, regardless of its size.

The statement that it can enhance company liquidity is accurate because effective external cash management strategies, such as optimizing cash collections, managing payment schedules, and investing idle cash appropriately, can significantly improve a company's ability to meet its short-term liabilities and invest for growth. By employing these strategies, organizations can enhance their cash flow, reduce financing costs, and improve their overall financial agility.

This is especially relevant for businesses operating in environments where cash flow can be volatile or uncertain. Good cash management practices help ensure that funds are available when needed without unnecessary delays, facilitating better budgeting and financial planning.

In comparison to the other options, it's clear that external cash management is beneficial for all businesses, regardless of size, and is certainly not considered unhelpful or unnecessary. It is a critical aspect of financial management that supports operational resilience and strategic objectives. Therefore, the assertion that it can enhance company liquidity stands as the most accurate statement regarding external cash management.