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  1. The act of reducing assets to cash and distributing cash accordingly, especially of a business that is being wound up.
  2. The act of determining the cash value of some debt or damage. The parties involved essentially reduce their legal conflict or outstanding debts to a dollar amount. Debts and damages can be liquidated in various ways: By an agreement before any dispute arises, by an agreement after a dispute arises, or by litigation.
  3. When importing merchandise, the U.S. Customs Service will collect or refund duties to adjust estimated duties for actual duties required for entry of merchandise in a process called liquidation.

[Last updated in June of 2023 by the Wex Definitions Team]