Liquidity Management for Mid-Sized Companies
Liquidity management is the basis for the financial stability of mid-sized companies. It means having transparency at all times over all relevant payment flows:
incoming and outgoing payments
account balances
short-term obligations
future liquidity development
Liquidity management is essential for CFOs and finance leaders in mid-sized companies because it forms the basis for sound decisions, makes liquidity bottlenecks visible early and secures the company’s solvency at all times.
What Does Liquidity Management Mean for Mid-Sized Companies?
In mid-sized companies, liquidity management includes the planning, monitoring and management of all payment flows so that the company remains solvent at all times and can make well-founded financial decisions.
In the mid-market, finance teams often work with several bank accounts and different ERP systems and need to make international payments. Complex payment structures can lead to insolvency despite full order books if liquidity planning is neglected.
Why Liquidity Management Is Business-Critical in Mid-Sized Companies
Liquidity management affects the entire company every day. Together with liquidity ratios, it often forms the decision-making basis for investments, financing and risk management.
In mid-sized companies, manual work processes and inconsistent data increase the risk of errors. Typical consequences are:
liquidity bottlenecks only becoming visible when it’s too late
delayed decisions on investments or financing
excessively high inventory levels or customer payment terms that are too long
Through digital liquidity management, mid-sized companies can address these problems.
Identify liquidity bottlenecks earlier with Financial Navigator
How Modern Liquidity Planning Works in Mid-Sized Companies
Liquidity planning is a core process in liquidity management. It creates transparency over incoming and outgoing payments and helps CFOs assess the company’s financial stability early. Forward-looking planning across all time horizons is therefore important.
A rolling 13-week liquidity plan can look like this, for example:
Period | Focus of liquidity planning | Typical incoming payments | Typical outgoing paymentsi |
Weeks 1-4 | Short-term liquidity, early bottleneck detection | Open receivables | Supplier invoices, salaries |
Weeks 5-8 | Medium-term planning, investment management | Order completions | Investments, project costs |
Weeks 9-13 | Long-term, strategic planning | Quarterly revenue, market launches | New locations, long-term loan repayments |
Short-Term Liquidity Planning
Short-term liquidity planning includes daily or weekly bank account checks, open receivables, payments due, payroll, taxes and short-term financing.
Medium-Term and Long-Term Planning
Medium-term and long-term liquidity planning looks at the investment planning, financing and growth decisions quarterly or per financial year
Which Tools Does Professional Liquidity Management Need?
Professional liquidity management in mid-sized companies relies on a range of financial tools, including cash management, working capital management, receivables management and liquidity ratios. They help companies make liquidity transparent and make well-founded decisions.
Liquidity Planning and Forecasting
Liquidity planning and forecasting focus on improving the accuracy of cash flow predictions. The aim is to produce reliable plan versus actual comparisons, implement rolling forecasts and develop scenarios in order to receive early warning signals for potential liquidity bottlenecks.
Receivables and Liabilities Management
Receivables and liabilities management controls payment due-dates, dunning processes, open items and supplier conditions. This allows incoming payments to be accelerated and liquidity to be protected in a targeted way.
Bank and ERP Integration
Automatic synchronisation of bank connections and integrations with ERP and finance systems reduces manual data entry and creates a central database.
Reporting and Liquidity Ratios
CFOs and finance managers in mid-sized companies should know liquidity ratios such as cash liquidity, planned versus actual comparisons, cash conversion cycle and forecast accuracy. They form the basis for decisions and should be available in real time.
Which Three Levels of Liquidity Are Relevant for Mid-Sized Companies?
The three levels of liquidity, also known as liquidity degrees, give CFOs and finance managers important insights into their company’s financial health.
1st Degree Liquidity, Cash Liquidity
Cash liquidity shows liquid funds in relation to current liabilities. It answers the question of whether payments can be paid immediately.
2nd Degree Liquidity, Collection-Based Liquidity
Collection-based liquidity compares liquid funds and short-term receivables with current liabilities. It is especially relevant because receivables collection periods strongly influence cash flow.
3rd Degree Liquidity, Current Ratio
Current liquidity shows liquid funds, receivables and inventories in relation to current liabilities. It shows how strongly working capital and inventory levels influence liquidity.
Examples of Liquidity Management in Mid-Sized Companies
The following examples of liquidity management show how mid-sized companies can secure their solvency and manage liquidity in a targeted way.
A production company with high inventory levels makes tied-up capital visible through better inventory and payment planning.
A CFO plans investments in machinery or expansion and uses scenario planning to check whether liquidity is sufficient.
A finance team replaces Excel planning with one central software with automated reporting, plan versus actual comparisons and fewer manual errors.
From Excel to Digital Liquidity Management Software
Excel and classic ERP processes are often not enough for liquidity planning in mid-sized companies. Liquidity planning software creates the basis for greater transparency, more efficient planning and centralised management.
Why Excel Quickly Reaches Its Limits in Mid-Sized Companies
Manual Excel processes can quickly lead to errors, delays and reconciliation problems:
Multiple file versions and errors: Several Excel files with different versions quickly lead to incorrect planning values.
Manual bank data and consolidation: Account balances and transactions must be transferred manually, making data consolidation difficult.
Lack of approvals: There are no clear workflows for reviews, approvals, and assigned responsibilities.
Why ERP Systems Alone Are Often Not Enough
ERP systems often do not offer enough flexibility in liquidity and treasury management. Precise liquidity planning requires up-to-date daily data, scenario planning, multi-bank overviews and rolling forecasts.
Optimising Liquidity Management With Financial Navigator
Financial Navigator is a Treasury Management System focused on automated liquidity management. The platform is active in more than 30 countries, offers over 13,000 bank connections, creates 98% cash transparency and has already saved more than 10,000 hours in financial administration.
Central Liquidity Transparency Across All Bank Accounts
Companies can see all accounts, banks and payment flows transparently in one centralised dashboard. This solves a core problem for many mid-sized finance teams: Lack of overview.
Automated Planning Instead of Manual Updating
With automatic data flows, forecasts and plan versus actual comparisons can be generated faster and kept more up to date. This reduces manual work with Excel lists and saves time.
Better Decisions Through Reporting and Scenarios
Cash flow forecasts, scenario planning, early bottleneck detection and CFO dashboards allow decisions to be made based on current data.
Scalable for Growing Mid-Sized Companies
Financial Navigator can be rolled out step by step. It can be used flexibly in companies with several entities and international bank accounts.
Who Is Financial Navigator Suitable For?
Financial Navigator supports different roles in mid-sized companies in managing liquidity transparently and making finance processes more efficient.
CFOs
CFOs need a strategic view of liquidity, investments, financing and risks. Financial Navigator provides the data basis for this.
Finance Managers
Finance managers manage working capital and day-to-day business. With Financial Navigator, they keep a central view of bank accounts, payment flows, forecasts and reports.
Controlling Teams
Controlling teams need variance analyses and reliable data for budget and forecast processes. Financial Navigator creates a central data basis for this.
Mid-Sized Company Management
Management needs a quick overview of liquidity and financial room for manoeuvre. Financial Navigator makes this transparency available without time-consuming reconciliation.
FAQ: Liquidity Management for Mid-Sized Companies
What does liquidity management mean for mid-sized companies?
Liquidity management involves planning, monitoring and controlling all payment flows and secures the solvency of mid-sized companies.
Why is liquidity management so important for mid-sized companies?
Even profitable companies can come under pressure due to late payments or high inventory levels. Liquidity management makes these risks visible early.
Which examples of liquidity management are there in mid-sized companies?
automated receivables management
13-week planning of liquidity and payment flows
active working capital optimisation
Which liquidity degrees should mid-sized companies know?
Liquidity degree 1: liquid funds vs. current liabilities.
Liquidity degree 2: liquid funds + receivables vs. current liabilities.
Liquidity degree 3: liquid funds + receivables + inventories vs. current liabilities.
Which tools are part of liquidity management for mid-sized companies?
liquidity planning and cash flow forecasting
receivables and liabilities management
bank and ERP integration
Treasury management software
When is liquidity management software worthwhile for mid-sized companies?
For companies with:
several bank accounts,
manual processes,
recurring forecast deviations,
high reporting efforts.
How does Financial Navigator differ from Excel or an ERP system?
Financial Navigator is a specialised, flexible platform for liquidity planning and treasury management that centrally consolidates and automates data from Excel and ERP systems.
Digitalise Liquidity Management in the Mid-Market Now
Liquidity management is the basis for financial stability, sound decisions and sustainable growth for mid-sized companies.
Financial Navigator creates transparency, automates planning and connects bank accounts, ERP data and finance processes in one central platform. This allows CFOs and finance teams to manage liquidity more efficiently.
Manage your liquidity more transparently and based on data with Financial Navigator.
Optimise Your Liquidity and Treasury Management
Do you want a modern Treasury Management System that meets your requirements? Financial Navigator supports you in centralising your financial processes with real-time transparency, automated forecasts, seamless bank integration. Fill out our demo form and speak with our experts!