Liquidity planning

A large part of the approximately 30,000 bankruptcies in Germany each year can be traced back to liquidity problems. Many bankruptcies could be avoided if the company had a well-founded liquidity forecast. Securing the liquidity and willingness to pay of a company is a task to which every owner or managing director of a company must devote the highest priority to himself, and not only in a difficult economic situation. Due to the existential importance of the topic, the task should not be delegated to another person. Read below why you should give top priority to securing liquidity.

1. Keep track of payment transactions

With a liquidity forecast, you can in most cases avoid larger and existence-threatening payment bottlenecks. However, many entrepreneurs are still of the opinion that liquidity planning is not necessary for them, as they believe that they always have an eye on all the essential processes of "their" business. However, practice and a look at the company account show that even in smaller companies, 100, 200 or more payment items are quickly generated every month. This means that it is hardly possible any more to keep track of the financial resources at all times without written documents. And the so-called management of account statements (" If we have money, everything is fine, if we don't have any, we have to think about something. “) Is almost a guarantee for the path to insolvency, as the overview is missing and - if at all - only a reaction to payment problems is possible.

If you overlook or forget just a few items, liquidity gaps usually have to be closed at short notice with a current account credit. In the best case, higher (interest) costs arise. In the worst case, however, there are also negative entries at the bank. Especially in times of crisis, the risk of loan cancellations increases disproportionately with all the negative consequences.

Example: You have estimated that you will have to pay salaries, rent, material and other bills with a volume of around € 26,000 in the current month. You can expect around € 27,000 in incoming payments in the same period. Do not worry about possible payment bottlenecks, especially since you have a credit line of € 10,000. However, you overlooked the fact that a tax prepayment of € 9,000 has to be made in the same month and repayments of € 3,000 are due. This means that you not only incur unnecessary loan interest costs (with an overdraft of € 11,000 and 14% interest for one month, at least € 130). You also unintentionally exceed your credit line, which brings you negative entries at your bank, as you could not inform the bank in advance about the upcoming temporary bottleneck.

Practical tip: So that no payment-related facts are forgotten, you should sit down with your tax advisor and, if necessary, bookkeeping assistant and look through the business cases of the last 1 - 2 years. The long period should be chosen to ensure that individual items are not overlooked, e.g. B. occur only once a year.

2. Recognize liquidity bottlenecks at an early stage

Without tools, you cannot see which payments will be due in a few days, weeks or months and what effects this will have on the solvency of the company. Because the time factor plays a central role in liquidity planning: If you can expect high incoming payments in the future, you must always be able to settle your current and daily payments.

Liquidity planning, in which all expected payment items are mapped, ensures that you always have an overview of how the current solvency is and how it is expected to develop. You can identify possible liquidity bottlenecks at an early stage and work out solutions in peace. The liquidity planning should created at least on a monthly basis and also updated and renewed at monthly intervals in order to be able to recognize the impact of changes on liquidity in good time.

Example: You create a liquidity plan for a period of one year. This shows you that you receive an average of € 12-13 thousand in monthly payments. On the payout side, there are regular payments, e.g. B. for salaries, rents, material or repayments, from 10 - 11 T €.

However, the liquidity planning also clearly shows that, in contrast to the deposit side (sales), again and again irregular and one-time payouts must be taken into account, e.g. B. Insurance premiums, tax prepayments, vacation or Christmas bonuses. With this knowledge, you can take countermeasures in advance.

Example: As soon as you start planning, you will see that the months of March, June, September, November and December will likely have higher than normal cash outflows. You therefore speak to your client advisor in good time and can use the liquidity planning to convince them that the bottlenecks are only temporary. The bank will then increase the credit line at the same conditions as before, but asks you to take more care of measures to secure liquidity than before.

Practical tip: Sales do not always lead directly to incoming payments. If you prefer to sell on account, receivables will initially arise, but these will only be realized after the payment term has expired, provided there are no delays or failures. In order to increase planning security, you should therefore work with discounts, especially when it comes to sales. B. the average bad debt loss of the previous year plus 2% - 5% "safety buffer". Similarly, you should take into account surcharges on the payout side. If there are no liquidity gaps in the following months, the solvency of your company is basically in good shape.

3. Know and implement measures

The answer to the question of which improvement measures can be implemented is part of liquidity planning and securing. On a short and medium-term basis, this is already possible with little effort.

Example: Always submit invoices immediately after a service has been performed! On the one hand, this ensures continuous incoming payments that can be used to pay your own obligations. Second, fewer free loans are granted to customers. Surveys show that with a payment term of 30 days between invoicing and receipt of payment, an average of 46 (!) Days still pass. During this time, you may have to take out a loan yourself or use your credit line for the amount. For every € 10,000, assuming 14% interest for 46 days, that's almost € 180.

The following Checklist shows further possibilities how you can sustainably improve the liquidity situation in the short and medium term.


Measures to improve liquidity

  • Consistent reminders in the event of default in payment (attention: proceed with a sure instinct in individual cases, e.g. for customers who usually pay on time)
  • Agreement of payment by direct debit
  • Increase in the proportion of cash payments or payments with EC / credit cards
  • Shortening the payment terms (especially for new customers), e.g. B. accelerated receipt of money from 20 to 30 days
  • Postponement or suspension of investments or other major purchases
  • Lease or rent instead of buying fixed assets
  • Implementation of cost reduction measures
  • Converting short term to long term loans
  • Sell assets that are no longer needed
  • Reduction of private withdrawals or (temporary) waiver of salaries by the manager
  • With high levels of receivables: sale of receivables (factoring) to a specialist company (factor), further information at
  • Contributions by the shareholders in critical situations and / or by a new (silent) partner
  • In an emergency: Negotiation with creditors about postponing due payments (caution: partners could end the business relationship)

Precisely because there are also developments that cannot be influenced, e.g. B. the sudden bankruptcy of customers or price increases and thus higher costs for materials or energy, you should build up a financial cushion in order to be able to survive payment defaults or a lack of orders without damage.

4. No bank loan without liquidity planning

Last but not least, every bank now demands reliable liquidity planning with an outlook of at least 1 to 2 years. If there are liquidity gaps, the bank wants to know exactly how these should be closed. Otherwise, the loan request will be rejected outright, or higher interest than actually necessary will have to be paid.

Example: With a loan amount of “only” € 200,000, one percentage point higher interest amounts to € 2,000 per year.

Every entrepreneur must therefore prove to the bank that he has taken on the topic, submit a plan and show what measures he is implementing or has implemented in order to improve liquidity.

And other business partners, such as large customers or suppliers, increasingly want proof that the future partner will most likely remain solvent for the next few years.

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All information and details in our articles and information have been compiled to the best of our knowledge. However, they are provided without liability. This information cannot replace individual advice in specific cases.