Liquidity planning refers to the systematic planning and monitoring of a company's incoming and outgoing payments to ensure solvency.
Basics
The focus is on expected incoming and outgoing payments within a specific period. The goal is to identify cash flow shortages early on.
The basis for this includes data from Financial accounting, The Payments and open items of the Debtors ledger and Accounts payable.
Legal framework
Liquidity planning is not a standalone statutory financial statement item, but it is one of a company's essential business management tools.
Systematic classification
The liquidity planning is related to:
While the annual financial statement represents past-based figures, liquidity planning is future-oriented.
Typical components
- Expected incoming payments
- Expected payments
- Planning period
- Liquidity reserve
Typical procedure
- Recording of expected receipts and payments
- Creating a liquidity plan
- Ongoing monitoring and adjustment
Practical relevance
Structured liquidity planning supports the assurance of solvency and serves as the basis for business decisions.
Typical sources of error
- Incomplete consideration of payment obligations
- Overly optimistic assessment of incoming payments
- Missing ongoing update
FAQ
Is liquidity planning compulsory?
It is not a formal part of the annual financial statements, but it is an essential management control tool.
How does it differ from the annual financial statements?
The financial statements are backward-looking, while liquidity planning is forward-looking.
What data is used?
Primarily, expected cash flows from ongoing operations.
Conclusion
Liquidity planning is a forward-looking instrument for ensuring solvency. It complements financial accounting with a planning-related perspective.
Brasser Accounting Solutions GmbH is a specialised accounting service provider and part of a corporate group with Quint GmbH (tax consultancy/auditing) and Service Place Årjäng AB (Swedish tax office). BAS exclusively performs services according to § 6 No. 3 and 4 StBerG and does not provide tax or legal advice.
