A healthy business starts with healthy cash flow. Whether you are a start-up or a seasoned CFO, the cash flow statement is one of the most important financial documents at your disposal. But what exactly is it, and why should you look at it regularly?
What is a Liquidity Statement?
A liquidity statement provides insight into a company’s available cash in the short term. It shows how much money is coming in and going out, and helps determine whether you can meet your payment obligations.
Think about:
- Income: such as payments from customers, grants, loans.
- Expenses: such as salaries, rent, taxes, supplier invoices.
The overview is usually divided by day, week or month, depending on the need for detail.
Why is it Important?
A good liquidity overview will help you:
- Preventing payment problems
You see in time when a shortfall is imminent, so you can take action (e.g. apply for deferred payment or seek additional funding). - Making better decisions
Looking to invest in new equipment or hire staff? Then you want to make sure you have enough cash in the coming months. - Building trust with financiers
Banks and investors want to see that you have a grip on your cash flows. An up-to-date and well-substantiated liquidity statement is essential for this.
How do you create a Liquidity Statement?
You can create a simple liquidity statement in Excel or accounting software. The basic structure:
| Period | Beginning balance | Revenue | Expenditure | Closing balance |
|---|---|---|---|---|
| Week 1 | €10.000 | €5.000 | €3.000 | €12.000 |
| Week 2 | €12.000 | €2.000 | €4.000 | €10.000 |
You can extend this with categories, scenario analysis and charts for more insight.
Tips for Strong Liquidity Management
- Work with realistic forecasts: Base your figures on historical data and expected developments.
- Update regularly: Weekly updating is ideal for dynamic businesses.
- Use software: Tools such as Exact, TriFact365 or Visma help automate administration and get an overview.
A liquidity overview is not a luxury, but a necessity. It gives you control, peace of mind and strategic insight. Whether you are growing, consolidating or going through a difficult period – liquidity is the lifeblood of your business.
