Liquidity Planning

Nothing is possible without professional liquidity planning

Liquidity describes the ability of enterprises to pay.  Only if every liability can be paid on the maturity date, a hotel or other business is solvent. If this is not the case then illiquidity threatens the company, which may lead to insolvency.

Therefore, liquidity planning is a very important management function, especially for companies such as hotels and restaurants. Since fluctuating turnovers and high fixed costs are the enemies of a good liquidity. Detailed planning indicates at which times the liquidity could become scarce. This knowledge should lead to operational actions, such as reducing the payment periods, motivate the customers to pay earlier, negotiate bridging loans, or negotiate an extension of your own payment dates.

Often it is useful to derive a professional liquidity plan (Excel based) from the detailed cost and turnover planning and constantly adapt to the actualities of the situation.

For the setup of the liquidity planning (RHC uses macro-driven Excel spreadsheets) keep in mind the following points:

• What expenses are there?
• What planned expenses are involved and what are the due dates for payment?
• What sales and other revenue is targeted and when is the cash expected?
• When must services be paid?
• How much is the cash / bank deposits?
• What scope grants the Bank?
• What other factors need to be considered?
• What security buffer should be observed?

Unlike the capital requirement plan, the liquidity plan is a rather short-term planning for cash flows with a forecast period of less than a year.

Let us show you how the RHC hotel consultants implement an Excel based rolling liquidity plan for you.