Cash flow and liquidity planning for companies: which reports banks want to see

When it comes to corporate financing and planning, the right communication with banks and financing partners plays a decisive role. Structured, well-founded cash flow planning and the reporting of financial key figures are important points that banks are particularly interested in. But which reports are really relevant, and how can clear planning improve the risk assessment made by financing partners? Here you will learn how strategic, well-documented cash flow planning creates plus points for your company.

Reports to banks: what is necessary?

Many companies face the question: which financial reports should or can be sent to banks? Whether for ongoing operational reporting or as part of a loan agreement – companies have various ways of communicating their financial position. The following reports play a central role here:

Forecast reports – show a prudent projection of future liquidity and cash flows.
Static plan – represents a starting position and serves as a reference point for making future variances from plan visible.
Variance analysis – makes clear where current developments deviate from the planned course.

With these reports you give your bank a clear overview of your company’s financial situation and planned developments. In addition, transparent and comprehensible planning strengthens the confidence of banks and financing partners.

Why is a static plan important for reporting?

A static plan serves as an unchangeable basis that lets you respond to changes in your financial planning at any time without losing the original assumptions. Once a plan has been approved by a bank, you can fix it in COMMITLY by “committing” it. That way you avoid unintended changes and create clarity. In most cases this plan is also the basis for the plan vs. actual analyses in the monthly reporting to the bank.

For financing partners it is often decisive to see that a system for cash flow planning exists and is actually being used. Creating fixed plans and scenarios and adjusting cash flow projections in line with current developments shows your willingness to plan your business ahead.

Strategic planning: the prudent merchant

Cash flow planning should always follow the principle of the “prudent merchant” – a proven method of minimising risk. The guiding rule: better to calculate conservatively than to rely on overly optimistic assumptions.

Important aspects of cash flow planning:

Income: assume cautiously, especially when incoming payments are uncertain.
Expenses: better to schedule them too early to avoid surprises.
Timing: always allow for possible delays, above all with customer payments.

With this approach companies can make sure they stay in control of their liquidity even in difficult phases. A transparent plan also makes it easier to identify potential liquidity problems and to react to them in good time.

Scenarios and Forecasts in cash flow planning

For internal purposes it is worth creating scenarios. This is especially helpful if you want to play through different plans or assumptions, for example a better case, worst case or best case scenario. In tools such as COMMITLY you have the option of setting up a dynamic scenario in addition to the rolling Forecast. This lets you adjust revenue or other factors and show the possible effects on liquidity.

Planning scenarios of this kind help you take strategic decisions on a sounder basis and adapt the Forecast flexibly to market changes or operational developments.

Operational reporting and loan agreements

In day-to-day operations you can create reports for your bank depending on your strategy and needs. Two types of report are particularly suitable for ongoing reporting:

12-month plan: shows longer-term planning of liquidity development and cash flows based on assumptions.
12-month Forecast: presents the current expectation based on the latest data.

Where loan agreements are in place, even more precise reporting is often required. In this case banks and financing partners want to see how liquidity has developed compared with the situation when the loan was granted. It therefore makes sense to create a separate static plan for the loan, to fix it (to commit it in COMMITLY) and to use it continuously for reporting. Deviations from the original plan can be documented clearly through variance analyses.

Conclusion: successful communication through clear cash flow planning

Well-documented, comprehensible cash flow planning is the foundation for successful cooperation with banks and financing partners. With a static plan, operational Forecasts and clear variance analyses you make sure that your bank can follow your company’s financial position and liquidity development at any time. Transparent financial communication not only strengthens the confidence of your financing partners, it also supports the risk assessment in the sense of a positive company valuation.