For an SME, liquidity is often more decisive than year-end profit. A company can be profitable and still struggle to pay its bills – for example when customers pay late, seasonal swings hit, or a larger investment is due. A structured liquidity plan creates clarity: it shows early when financial shortages threaten and provides a basis for timely decisions – whether on your own spending or when looking for financing.
What is a liquidity plan?
A liquidity plan compares when money flows into the business and when it leaves again. Unlike the income statement, which records income and expenses by economic period, a liquidity plan works with actual cash flows. An invoice you issue in January but only get paid in March therefore affects your liquidity only in March.
You do not need complex software for this. A simple monthly overview over 12 months is enough in most cases to keep track and react in time.
The three building blocks of every liquidity plan
- Opening balance: How much liquid funds (bank balances, cash) are available at the start of the period?
- Inflows: All expected cash receipts – primarily customer payments, but also other sources such as capital contributions or grants.
- Outflows: All expected cash payments – staff, rent, materials, insurance, loan instalments, taxes and other running costs.
From these three elements you get the liquidity balance for the period, and from that the closing balance – which is also the starting value for the next month. Continued over twelve months, you get a realistic picture of your company’s financial path.
Why the effort is worth it
- Early-warning system: A negative balance over several months can be seen far ahead – so you can act in time instead of reacting only when the account is already empty.
- Better decision basis: Whether a larger purchase, a new hire or a marketing campaign is affordable can be judged much more soundly from the plan.
- Stronger position in financing talks: A clear liquidity plan is among the documents lenders – banks or digital providers such as Kamuno – regularly want to see. It shows that a company has its figures under control and speeds up the review of a financing request.
The template
The Excel template covers twelve months and is split into three sections: inflows, outflows and the calculated liquidity balance. Yellow fields are for you to fill in; the others calculate automatically. Each month’s opening balance takes over the previous month’s closing balance automatically – so you only need to enter it for the first month.
How to proceed:
- 1. Enter your current account balance as the opening balance for the first month.
- 2. Estimate expected cash inflows and outflows for each month – as realistically as possible, not optimistically.
- 3. Check the calculated liquidity balance each month: if it is negative for several months, take a closer look at possible measures.
- 4. Update the plan regularly – ideally monthly – with actual figures to improve accuracy for the months ahead.
What if the plan shows a gap?
If your liquidity plan shows an upcoming shortage, you have the advantage of being able to react early – for example by adjusting payment terms, postponing spending or arranging targeted financing. Especially for short-term or seasonal shortages, a flexible credit line such as Kamuno’s works well: you draw only the amount you actually need and pay interest only on that. Bridging a few tight months becomes much more predictable than with a rigid one-off loan.