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Liq­uid­i­ty plan­ning

How much cap­i­tal will you need in the months and years ahead? What types of fi­nanc­ing are avail­able to cov­er this amount? A fi­nan­cial and liq­uid­i­ty plan will pro­vide you with an overview of the funds re­quired, as well as how to best man­age your com­pa­ny's avail­able liq­uid­i­ty.

Why do I need a liquidity plan?

Iden­ti­fy­ing liq­uid­i­ty bot­tle­necks

Com­pre­hen­sive liq­uid­i­ty plan­ning iden­ti­fies when po­ten­tial liq­uid­i­ty bot­tle­necks might oc­cur and the amount of fi­nanc­ing re­quired. This gives you the op­por­tu­ni­ty to act quick­ly.

Overview of the cur­rent fi­nan­cial sit­u­a­tion

Liq­uid­i­ty plan­ning pro­vides a sol­id overview of the com­pa­ny's ex­pect­ed cash flow.

Ac­tive cash man­age­ment

A liq­uid­i­ty plan shows when the com­pa­ny will have avail­able liq­uid­i­ty, and how much this will be. This al­lows you to op­ti­mize your cash man­age­ment and gen­er­ate ad­di­tion­al in­come.

What is liquidity planning?

Liquidity planning is used to compare the company's expected income and expenses as of an exact date. It is therefore is a type of early warning system for any potential liquidity bottlenecks and ensures that the company remains solvent for the foreseeable future. It also shows how much available liquidity can be generated in the short term, medium term, and long term.

 

This is essential during the startup phase, because expenses for wages and materials will be incurred from the very first month. However, it may be several months before payments start to come in. 

What do I have to bear in mind in terms of liquidity planning?

Keep the liq­uid­i­ty plan up to date

Up­date your liq­uid­i­ty plan as of­ten as pos­si­ble and track all changes close­ly, ide­al­ly by up­dat­ing the lat­est ac­count ac­tiv­i­ty.

Due dates and pay­ment dead­lines

In­clude pay­ment due dates in the liq­uid­i­ty plan in or­der to en­sure a cor­rect liq­uid­i­ty fore­cast.

Mon­i­tor the plan us­ing a tar­get-per­for­mance com­par­i­son

Use a month­ly tar­get-per­for­mance check to reg­u­lar­ly ver­i­fy the ac­cu­ra­cy of your plan­ning. Ad­just your plan in the event of sig­nif­i­cant dis­crep­an­cies.

What is a financial plan?

Alongside liquidity planning, financial planning includes additional instruments such as a balance sheet forecast, an income statement forecast, and a cash flow statement forecast. It looks at the company's entire assets and provides a general summary of the next two to five years. This allows you to identify problems at an early stage and take action.

Download the Excel template as an effective planning tool for your company and keep track of your liquidity situation.