Strong for 2021: Here's how to give your business more cash control in three steps

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Cash shortages are a scourge for businesses and their entrepreneurs. Thousands of them go under every month. Here's our three-step guide to setting up cash control.

Keeping track of liquidity flows is often considered a thankless and complex task. But there is another way. Regularly monitoring your cash flow is a foundation for managing your business well and staying financially healthy - especially in difficult and turbulent times. Agicap shows you what you need to know to set up cash flow control and prevent default risks.

What are the benefits of regular liquidity control?

If you know how much money you have today and will have tomorrow, you can make sure that you always stay liquid. After all, this is essential to ensure the sustainability of your business.

If you are a business manager, you probably have questions that come up again and again in connection with liquidity management:

  • What is my current liquidity?
  • How will she fare in the next month?
  • How does the ratio compare to debits and credits?
  • What happens if this customer pays me late?
  • Should I delay or even defer payment to this vendor?
  • Can I invest capital?

These are the kinds of questions that business liquidity management is all about. You need to be able to answer them on a weekly or even daily basis to make the best management decisions for your business. The benefits are not only financial but also strategic. Establishing a liquidity control system means better understanding the challenges your business faces in order to manage both cash-rich and cash-strapped periods.

This monitoring is even more vital for companies with seasonal business, as operating revenues can fluctuate significantly over the months.

As you probably know, liquidity control also and above all provides information about the performance of your company. Keeping an eye on the volume of orders is important, but not enough. Pay attention to elements that are not on your radar and that could drive you into the red: for example, late customer payments, VAT, loan repayments, interest and so on. A complete overview of transaction receipts and payments ensures that you are in control of your business.

How do you specifically set up your liquidity control?

Here come three steps you should complete in that order to track your liquidity performance:


Step #1: Define categories for your incoming and outgoing payments!


Identify all sources of cash inflows and outflows in your business.

On the revenue side, you'll find the following items traditionally listed:

  • Customer billing: enter your existing customers and continuously monitor your prospects
  • Bank loans: inflows from bank financing
  • Other inflows: Equity contributions, investors, etc.

On the payout page you will usually find these items listed:

  • Suppliers/external service providers: raw materials, forwarding agents, etc.
  • Personnel costs: costs for salaries and bonus payments
  • Premises: Rent (workshop, shop etc.)
  • Bank loan: Loan repayment (principal and interest)
  • Miscellaneous: IT, energy, catering, etc.
  • Taxes (VAT, corporate income tax, etc.)

Your categories are thus created. You can now enter the contributions of past and future receipts and payments for each of these categories into your liquidity budget.

Caution: Try to be as precise as possible when choosing categories for disbursements. If you forget an important expense item, it can distort your forecast, causing actual liquidity to fall short of your projections.

Step #2: Create liquidity forecasts for one, three and six months!


Start by entering, month by month, the inflows and outflows you expect in the following month, and in the next three to six months, if necessary.

If some revenue is subject to uncertainty as to whether or not your products will sell, and thus difficult to predict, you should set revenue budgets to keep your sales goals in mind.

On the expense side, it's easier. Start by planning all fixed cash outflows for the future: for example, rent payments, salaries and loan repayments. In short, all fixed costs where you have no real room for manoeuvre.

Next, you enter the future payouts you expect in connection with the business development: for example, liabilities to a new employee, extraordinary expenses, and so on.

Once you have entered these variable transaction amounts and your liquidity forecast is concrete, you can enter the actual deposits and withdrawals in the further course.

Step #3: Enter the actual incoming and outgoing payments!


In order to bring your forecast to life and adapt it to the reality of the company, regularly enter your actual receipts and payments, i.e. the incoming and outgoing payments that have already been made or are in progress: for example, your issued invoices and their payment, as well as outstanding amounts.

First you enter the amount of the already paid invoices and their actual payment date for the last three months and for the categories you created.

Then enter the amount of your issued but not yet paid invoices with their expected repayment dates.

By keeping an eye on the amount of your invoices, as well as the effective payment dates, your liquidity management stays up to date and you can anticipate short-term cash shortages.

There's a lot at stake: avoiding paying premiums, presenting your needs to your bank, negotiating a financing loan, and more.

The more you are able to visualize and thus anticipate the development of your liquidity in the short term, the faster you can react and initiate appropriate corrective measures.

What instruments are available for efficient liquidity control?


You now understand the importance and steps to setting up a cash control system. But you may be wondering what tool to use? Excel? Numbers? A bank portal? Or some other magical tool after all?
We've created a quick overview for you:

  • Excel & Numbers: Two tools that have the advantage that they are usually pre-installed on your computer for free, but have a big disadvantage. Both programs are often quite complex to use, especially if you have no previous knowledge of financial modeling.
  • Bank portal: Here, the bank balance is reliable and automatically updated, but you lack transparency regarding the future development of this balance for tomorrow, the day after tomorrow and beyond.
    Don't forget: liquidity is not only the available bank balance.
  • Agicap: A liquidity management software with continuous visualization of current and future cash flows - including an overview to anticipate the payment of premiums within a month.
    Conclusion: Agicap is an intuitive tool that, in your hands, can become the most important management tool to master the needs of your business.


About Agicap

Founded in Lyon in 2016, Agicap is a leading FinTech in the field of liquidity planning. The company offers software that enables small and medium-sized enterprises (SMEs) and decision-makers to manage liquidity in a targeted and simple way. All financial data of the companies are displayed on the dashboard of the software in real time - they are the basis for competent decisions from hiring to investments. More than 3000 client:s from a variety of business sectors, including hospitality, industrial, fashion, construction, real estate and agencies, are already using the technology. In 2020, Agicap received €15 million in its Series A financing round.

Agicap's head office is located in Lyon, France. Agicap employs 100 people at two locations. In Germany, the company has offices in Frankfurt am Main and Berlin. www.agicap.com/de/

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