Do you need a liquidity plan?

The BWA of the tax advisor is based on net figures, but your liquidity planning is based on gross figures, i.e. including VAT. The BWA contains items that reduce your profit, but not your liquidity. These include, in particular, depreciation and amortisation, provisions for warranties, or accruals and deferrals of turnover and, in some cases, personnel costs. Your liquidity plan, on the other hand, contains income and expenses that do not belong in the income statement. These are in particular loan repayments, the purchase of a computer or payments from investors.

Your bank balance always represents the past, but not your future. "Management by gut feeling" can cost you the survival of your company. Liquidity planning allows you to look into the future. With the help of scenario calculations, you can see how your company and your liquidity could develop.

Certainly, Excel is error-prone and not the optimal solution. From a certain company size, integrative liquidity tools are used. Founders and young companies that do not yet have a comprehensive sense of payment and little experience in corporate management should, should in my opinion start with a low-cost Excel version. In addition, the quality of the planning depends on the available data. Of course, the number of bank transactions also plays a major role. Online traders naturally have quantitatively more incoming and outgoing payments than a company that mainly offers consulting services and only writes three invoices a month.