Proactively managing liquidity: What a 13-week management plan delivers

On Monday, the bank balance looks reassuring. Two weeks later, salaries, supplier invoices, and a larger insurance payment come due. At the same time, an important customer pays later than expected.

Such timing shifts cannot be detected from the current bank balance alone. Management needs a forecast: Which receipts are realistically expected when, which payments are fixed, and what decisions need to be prepared?

A rolling 13-week liquidity plan can provide this overview. It combines information from accounting, sales, and operations into a common basis for work. External commercial management can coordinate the process and ensure that figures turn into concrete tasks.

Why the bank balance is not enough

A bank balance is a snapshot. It does not show which already incurred obligations will become payable in the coming weeks. An issued invoice also does not mean an available payment receipt.

Liquidity planning therefore focuses on expected cash flows. The German Federal Start-up Portal recommends a continuous forecast and emphasizes, among other things, expected customer payments, supplier liabilities, and financing leeway.

For short-term management, a weekly view is suitable. The 13 weeks proposed here complement longer-term monthly planning. They do not replace it and are not a general legal requirement.

The advantage lies in the time resolution: A month-end total can look balanced, even though a bottleneck arises in the meantime.

Start with a coordinated opening balance

At the beginning is a reliable starting point. Determine which bank accounts and, if applicable, cash balances are included in the plan. Amounts that are not freely available must be clearly identified separately.

An approved, still available line of credit can be shown separately. It should not merge unnoticed with the actual bank balance. This makes it clear whether the company uses its own funds or requires additional financing.

The closing balance of one week becomes the opening balance of the next. In addition, management can set an operational minimum buffer. Its size depends on the payment structure, fluctuations, and the company's options.

Which cash flows should be included?

The plan captures actual expected cash movements. These include, for example, customer payments, personnel payments, supplier invoices, rent, investments, as well as interest and repayments.

The KfW also distinguishes in its liquidity template between receipts, different types of payments, and financing. The template works on a monthly basis; for short-term management, a corresponding payment logic can be applied to weeks.

Record the actual amounts to be paid, including any VAT contained therein. Tax payments and refunds are planned separately according to the agreed amounts and expected dates. Their professional determination is carried out by those responsible.

It is important to avoid double counting: A payment already recorded as an outstanding supplier invoice must not also be included as a lump sum for material costs.

Realistically schedule receipts

The outstanding invoice provides a starting point, but not yet a reliable forecast. For the expected payment receipt, agreed payment terms, follow-up questions, orders, and known payment habits can also be relevant.

Practically, a brief explanation for larger items is useful: "Payment promised", "Order pending", or "Date unconfirmed". This makes it clear what the plan is based on.

Orders not yet won should not be placed in the same category as confirmed receivables without being clearly marked. In case of uncertainty, a separate scenario analysis is recommended.

The German Federal Start-up Portal also warns against setting expected customer payments too optimistically.

Turn the forecast into a decision

Management should now check which measures are actually available. For example, an outstanding customer inquiry can be clarified, an investment not yet bindingly commissioned can be postponed, or a financing discussion can be prepared.

Already agreed payment terms cannot be changed unilaterally. Deviating dates must be coordinated with the respective contract partner.

Every measure needs a person responsible, a deadline, and an expected effect. Only a reliable commitment justifies the corresponding change in the plan.

A mere note "pay supplier later" does not eliminate a bottleneck. The crucial question is whether the postponement was agreed upon and what impact it has on operations.

Update every week and learn from it

A rolling plan always looks the same far ahead. At the end of a week, the actual movements are incorporated, and a new week is added at the end.

A short, fixed meeting can answer four questions:

• Where do actual payments deviate from the previous plan?
• Which larger receipts or payments have changed?
• When will the agreed buffer be breached?
• Which decisions are required by the next meeting?

Deviations should be explained. Repeatedly late customer payments or regularly forgotten payments show where the data basis needs to be improved.

For tightly scheduled payments, a weekly view may not be sufficient. In such cases, the critical days must also be planned individually.

What role does external commercial management play?

The task involves more than compiling a table. External commercial management can coordinate data deliveries, return contradictory information for clarification, and prepare the regular meeting.

Start with existing systems

A first reliable plan requires above all clear data sources and responsibilities. A carefully maintained table may be sufficient for this. A clear processing status, restricted access rights, and a traceable change history are important.

Agenda is, according to Managing Director Jan Wilhelm, the currently installed standard software from ELB Services for in-house management and client support. Which data for a liquidity forecast is provided from it is clarified in the respective order. A built-in 13-week plan is therefore not claimed.

Further manufacturer information: Agenda Software ↗