Liquidity – the key indicator for financial health
A profound planning of liquidity includes all cash flows over a specific period of time. After the initial stock has been determined, all incoming and outgoing payments are recorded. The result is an accurate picture of how the cash flow (ie the availability of cash and cash equivalents) has developed over the period in question.
In order to be able to make forecasts about the liquidity in the future, the cash flow plan is then updated into the future – on the basis of the past performance of the cash flow. The goal is to predict the development of solvency and to early identify risks in the cash flow.
Liquidity planning is extremely important because it makes the solvency of a company visible. It’s as simple as that: If a company’s cash flow has become too low to settle payments, the business is massively threatened by insolvency!
Although liquidity is so important to a company’s financial health, cash flow management tools are hard to find. While many companies are still desperately trying to set up their cash flow plan with Excel spreadsheets, our software solution flowpilot offers an efficient and professional alternative to finally get your liquidity planning under control – fast and easy!