Liquidity Planning Without Gut Feeling: 7 Levers for More Transparency and Calm

Studies show: the majority of insolvencies arise not from a lack of revenue but from liquidity bottlenecks. Growing SMEs are particularly vulnerable – because growth ties up capital: higher inventory levels, longer receivables cycles, upfront investments in staff and infrastructure.

In Central Switzerland, we at SOKURA regularly encounter companies that are operationally successful but do not actively manage their liquidity. It works – until it doesn't.

The most important tool for short-term liquidity planning. Week by week, expected inflows and outflows are projected forward. The effect:

• Bottlenecks become visible 8–12 weeks in advance
• Room for manoeuvre emerges before things become critical
• The bank sees structured liquidity management

The effort: after initial setup, approximately 30–60 minutes per week. An investment that pays for itself many times over.

Many SMEs are too passive with invoicing and dunning. Concrete measures:

• Issue invoices immediately after service delivery – not at month-end
• Set payment terms to 10–15 days (30 is common but shorter is negotiable)
• Automated payment reminders from day 1 after due date
• Early payment discounts (e.g. 2% for payment within 10 days)

Mini-example: A services SME in Lucerne reduced its average DSO from 45 to 28 days – freeing up over CHF 200,000 in liquidity.

The flip side: consistently utilise own payment terms without straining supplier relationships.

• Actively negotiate payment terms with suppliers
• Only use early payment discounts when liquidity allows and the effective interest advantage is there
• Bundle payment runs on defined days

Net working capital (current assets minus current liabilities) is the central liquidity driver. Three levers:

• Inventory: Excess stock ties up capital. Regular stock analysis and min/max levels help.
• Receivables: See above – faster cash in.
• Payables: Use payment terms intelligently – slower out without losing suppliers.

What if a major customer pays in 60 rather than 30 days? What if a project is delayed? What if an investment falls due simultaneously?

Three scenarios suffice:

• Base case: Expected trajectory
• Stress case: Pessimistic trajectory (e.g. -20% revenue, longer payment terms)
• Best case: Optimistic trajectory

Scenario planning isn't pessimism – it's professional risk management.

Credit lines are negotiated when you don't need them – not when things are urgent. An SME with a clean forecast and transparent reporting has a significantly better negotiating position.

Tip: speak with your bank at least once a year about your credit line, even when everything is running smoothly. This builds trust and demonstrates professionalism.

Define clear thresholds that trigger an alert when breached:

• Minimum account balance (e.g. 2 months' payroll)
• Maximum DSO (e.g. 35 days)
• Liquidity runway (how many weeks does liquidity last without new revenue?)

A simple traffic-light system (green/amber/red) is sufficient to respond in time.