What do you need the liquidity forecast for?
For companies, the liquidity forecast is an indispensable strategic tool for companies. It helps to forecast and plan cash flows over a specific period, typically the next 90-360 days.
Controlling refers to the continuous process of planning, monitoring and managing the Cash position of a company. The aim is to continuously assess and improve the financial health of the company. Target/actual comparisons are used to make adjustments to avoid financial bottlenecks. bottlenecks financial bottlenecks and ensure long-term financial stability.
In addition, the liquidity status provides information on the company's current financial situation. It contains detailed information on available cash and cash equivalents, current receivables and liabilities, as well as long-term financing structures. A forward-looking Cash flow planning, combined with effective controlling, can not only help a company to secure its solvency, but also to recognize and exploit investment opportunities. This balance is dynamic and must be continuously adapted to changes in the operating business or the macroeconomic environment.
Variance analyses in the liquidity forecast
When preparing and monitoring the liquidity forecast it is necessary to understand the target/actual comparison approach. This form of analysis is used to determine differences between forecast and actual financial events.
By precisely identifying the causes of the deviations, companies can take proactive measures to adjust their Cash flow planning accordingly. This can mean planning incoming payments in a timely manner, better controlling expenses or rethinking financing strategies. In addition, regular variance analyses are essential to ensure that the financial health and therefore the business success of a company are presented realistically.
Cash position check and monitor
The liquidity forecast as a central element of strategic financial planning is far more than just a routine task. This becomes clear when you consider how it supports companies in proactively mastering financial challenges and exploiting opportunities in the market environment. A precise and realistic liquidity forecast gives companies a clear overview of their short and medium-term financial obligations. A comprehensive overview of finances is a helpful basis for securing sufficient funds to cover ongoing operating costs, wages, bills and other necessary expenses.
This not only increases financial planning security, but also protects the company from unforeseen liquidity bottlenecks, which could potentially impair the operating business. Forward-looking planning also enables resources to be calculated strategically. Companies with a well-founded liquidity forecast can better recognize and exploit investment opportunities, as they know exactly when and to what extent financial resources are available. This enables a more efficient use of capital and strengthens the competitive position in the long term. Overestimating the available Cash position can lead to risky investment decisions. Conversely, an underestimation can lead to the company acting more cautiously than necessary and thus missing out on opportunities.
