Knowing how long the money will last, and where the next headroom will come from.
In a crisis, it is not the earnings situation that determines the room for manoeuvre, but the bank balance over the coming weeks. Anyone who knows which payments fall due when, and which receipts are set against them, negotiates from a different position, with banks, with suppliers and within the company.
We set up the liquidity planning that provides this overview: week by week, reliable and designed so that you can continue it yourself after our engagement. We also work out the measures that increase the headroom.
What you gain
- 1You can see 13 weeks ahead which payments fall due and where things get tight, early enough to act rather than react.
- 2You recognise bottlenecks before they arise. The weekly budget-to-actual comparison shows deviations in the week in which they occur.
- 3You release liquidity that is already tied up in the company before new financing is discussed.
- 4You face banks and creditors with reliable figures. In standstill and restructuring talks, a traceable plan is the ticket for admission.
- 5You reduce your personal liability risk as a managing director. Anyone who documents the company’s ability to pay on an ongoing basis can prove what they knew and when.
Why annual planning is not enough here
A twelve-month business plan answers the question of whether the business model works. It does not answer whether wages can be paid at the end of the month.
In tight situations, the week is the unit that counts. An advance VAT payment, a payroll run and a large supplier invoice in the same week can put a company into payment difficulties, even though it is adequately financed over the year. Monthly figures hide exactly that.
Structure and data basis
We model actual cash flows, not income and expenses. The standard horizon is 13 weeks, that is one quarter. This is long enough to identify room for manoeuvre and short enough to remain reliable.
We show the items separately according to how certain they are:
Secured. Open receivables and payables, wages and salaries, taxes, social security contributions, rent, leasing, debt service. Here, the amount and due date are largely fixed.
Probable. Order backlog and purchase commitments. The revenue is contracted, but the timing of payment depends on completion, acceptance and payment behaviour.
Planned. Revenue and cost planning beyond the order backlog. Here we work with assumptions, which we disclose and justify.
The real work lies in the transitions: an order becomes an invoice, an invoice becomes a receipt of payment. We check how quickly this happens against your customers’ actual payment behaviour, not against agreed payment terms.
New every week
A liquidity plan that is drawn up once and then filed away is out of date after four weeks. We update it weekly and compare each past week with what actually happened.
The budget-to-actual comparison shows how reliable the assumptions are and makes adverse developments visible while they are still small. A customer who has been paying later than planned for three weeks is information for week three, not for month three.
This carries legal weight. Under Section 15b of the German Insolvency Code, managing directors must personally reimburse the company for payments made after the onset of illiquidity or over-indebtedness, insofar as those payments were not compatible with the care of a prudent business manager. Section 1 of the StaRUG (the German Act on the Stabilisation and Restructuring Framework for Businesses) obliges managing directors to monitor continuously any developments that could jeopardise the continued existence of the company and to take countermeasures.
Creating liquidity, not just measuring it
If the planning shows a gap, we work out the measures that can close it, in the order in which they take effect:
Every measure is entered into the planning with an amount, timing and responsibility. This keeps visible which part of the outlook is based on measures that have yet to be implemented.
Second opinion and plausibility review
Often there is already a plan in place that banks or shareholders doubt. We check it for arithmetical accuracy, the soundness of its assumptions and completeness, and state what needs to be reworked.
With lenders, a review by an independent third party often carries more weight than a revision made in-house.
