At a glance
- A central instrument in financial and corporate planning.
- Supports the early detection of liquidity bottlenecks and insolvency risks as well as strategic decisions such as investments or cost adjustments.
- Rolling planning ensures continuously updated forecasts.
- Can be integrated with P&L, cash flow, and investment planning.
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Liquidity planning definition
Liquidity planning is a central component of financial and corporate controlling. It ensures that a company is able to meet its due payment obligations at all times. To this end, future incoming and outgoing payments are compared in such a way that possible liquidity bottlenecks can be detected early and necessary measures initiated. Liquidity planning therefore has a direct influence on strategic and operational decisions and, depending on the company, is usually prepared by controlling, financial management, or senior management.
In the corporate context, liquidity planning is essential for ensuring stability, growth, and the ability to act – especially in dynamic markets and projects. It complements other planning instruments such as budgeting, earnings planning, or investment planning.
„Since we linked our liquidity planning in DeltaMaster with P&L and cash flow planning, we identify critical weeks much earlier and can take countermeasures before bottlenecks arise.“Head of Controlling
Industrial company
Why is liquidity planning important?
Reliable financial and liquidity planning creates transparency about a company’s solvency and forms the basis for fast, fact-based decisions. As a result, it is not only a planning instrument but also a management instrument that helps minimize risks. The key benefits of precise liquidity planning and management are:
- Early detection of bottlenecks: By comparing planned incoming and outgoing payments, possible liquidity bottlenecks become visible in good time – long before they actually occur.
- Avoidance of insolvency risks: Structured monitoring of liquidity ensures that solvency and the continued existence of the company are not jeopardized and that an impending insolvency can be averted.
- Basis for strategic decisions: The plan shows when funds become scarce or when scope arises, e.g. for investments, cost adjustments, or financing measures.
- Building trust with banks and investors: A well-structured liquidity plan conveys confidence – in the business plan as well as in credit negotiations.
- Better cash flow management: Timing differences between revenue and incoming payments become visible and enable realistic management of liquid funds.
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What belongs in a liquidity plan?
A professional liquidity plan contains all relevant cash flows that affect liquidity. These include in particular:
Cash inflows:
- Sales revenue (including payment terms and expected incoming payments)
- Grants, investment subsidies
- Loan drawdowns
- Contributions from shareholders
Cash outflows:
- Supplier invoices
- Personnel and social costs
- Rent and leasing payments
- Tax payments
- Loan repayments and interest
- Project-related expenditures (e.g., for IT projects or BI implementations)
In addition, companies can derive a liquidity plan from the income statement by adjusting the profit-and-loss items for non-cash effects. For operational decisions, however, a genuine cash-flow-based overview is indispensable.
What time period does liquidity planning cover?
The planning period, and consequently how often liquidity planning is carried out, can depend on the business model and the volatility of the payment flows. Typical time horizons are:
| Time horizon | Period | Purpose |
|---|---|---|
| Short-term | 1–13 weeks | Operational management and day-by-day solvency |
| Medium-term | 3–12 months | Planning of investments, financing needs |
| Long-term | Up to 3 years | Business plan, financing strategies, investor communication |
For many companies, rolling liquidity planning makes sense in order to combine short-term management with a medium-term perspective. Rolling liquidity planning ensures that an up-to-date planning horizon is always available, extending continuously into the future.
How does the liquidity planning process work?
A typical liquidity planning process comprises the following steps:
- 1. Collect data: Open items, payment terms, project budgets, ongoing costs
- 2. Forecast cash flows: Account for seasonal or project patterns
- 3. Create a liquidity overview: Compare cash inflows and outflows
- 4. Identify bottlenecks: Early identification of critical weeks or months
- 5. Derive measures: Secure financing, defer payments, optimize costs
- 6. Update continuously: Rolling and data-driven, to ensure a high planning quality.
In integrated financial planning tools, these steps can be implemented particularly efficiently, since they automatically consolidate data from accounting, ERP, and controlling, calculate scenarios, and provide clear dashboards – DeltaMaster offers practical functions here to make liquidity planning transparent, dynamic, and management-oriented.
Bissantz and liquidity planning
With DeltaMaster from Bissantz, liquidity planning can be closely interlinked with P&L and cash flow planning – on a shared data basis, without media disruptions. Payment flows, due dates, and liquidity reserves are clearly visualized so that critical bottlenecks become apparent early on. AI-supported functions in DeltaMaster detect conspicuous developments automatically, explain them, and suggest concrete options for action. Bissantz supports companies in the design and implementation of integrated liquidity planning solutions – from the short-term liquidity status to the medium-term forecast.
| Function | Benefit |
|---|---|
| Integration with P&L and cash flow planning | shared data basis without media disruptions |
| Visualization of cash flows and due dates | critical bottlenecks become apparent early on |
| AI-supported analysis | identifies notable developments, explains them, and suggests courses of action |
| Short-term liquidity status to medium-term outlook | seamless management across different time horizons |
„The rolling forecast in DeltaMaster gives us an up-to-date view of our cash flows at any time, without having to compile data manually.“Head of Finance
Food producer
Frequently asked questions
What is liquidity planning explained simply?
Liquidity planning means planning in advance when money comes into the company and when it has to be spent – so that there is always enough in the account to pay invoices, salaries, and other obligations on time. Put simply: it is a company's financial calendar that makes bottlenecks visible before they arise.
What is the difference between liquidity planning and cash flow planning?
Both consider cash flows, but differ in focus: liquidity planning ensures that the company remains solvent at all times – with a focus on short-term bottlenecks. Cash flow planning is broader in scope and also encompasses medium- and long-term financial flows from operating, investing, and financing activities.
How often should a liquidity plan be updated?
Ideally on a rolling basis – that is, weekly or monthly, depending on the volatility of the cash flows. Companies with seasonal fluctuations or project business should update the plan particularly frequently in order to be able to react early on.
Which mistakes are commonly made in liquidity planning?
Typical mistakes are: overly optimistic assumptions about incoming payments, failure to account for payment terms, no regular updating of the plan, and an isolated view without linking it to the P&L or investment planning. A time grid that is too coarse – e.g. only monthly instead of weekly – can also obscure critical bottlenecks.
How exactly does DeltaMaster support liquidity planning?
DeltaMaster interlinks liquidity, P&L, and cash flow planning on a shared data basis. AI-supported functions detect anomalies automatically and explain their causes. Rolling planning, scenario analyses, and a clear visual presentation make DeltaMaster a powerful tool for financial controlling.
Summary
Liquidity planning is far more than a financial overview – it is an active management instrument that helps companies remain solvent at all times, detect risks early, and make strategic decisions on a solid data basis. A rolling, integrated plan – linked to the P&L and cash flow – considerably improves planning quality. With DeltaMaster from Bissantz, liquidity planning becomes transparent, dynamic, and management-oriented – from the short-term payment status to the medium-term financial forecast.
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