Mastering Liquidity Planning in Uncertain Times: Challenges and Solutions

published on 28 february 2025 | Reading time approx. 7 minutes

The ongoing economic recession, growing geopolitical risks, and the increasing regulatory requirements in restructuring law—particularly through the StaRUG (German Corporate Stabilization and Restructuring Act)—are once again pushing liquidity planning to the forefront for finance executives and treasury professionals. According to the latest EACT studies from 2023 and 2024, cash flow forecasting ranks among the top two priorities for treasurers of major European corporations. The ability to predict cash flows with maximum precision is critical for maintaining liquidity and ensuring swift crisis response.¹A clear trend is emerging in corporate treasury: the adoption of technology-driven solutions that provide real-time liquidity insights, enabling immediate action. One of the key focus areas identified in the 2024 EACT study is the demand-driven preparation of cash flow data using interactive dashboards. Against this backdrop, this article highlights the complex challenges faced by companies and explores how digital tools can help overcome them effectively.

Economic consequences of Inaccurate Cash Flow Forecasting »
Technical Challenges in Financial and Liquidity Planning »
Effective Crisis Early Detection Through Data-Driven Planning Components »
Demand for Integrated and Intelligent Planning Solutions »
New Approaches to Cash Flow Planning »
Conclusion: Intelligent Liquidity Management as a Success Factor »

Economic Consequences of Inaccurate Cash Flow Forecasting

For many mid-sized companies, the biggest challenge lies in creating a precise, reliable, and efficient financial and liquidity plan that aligns with corporate strategy—allowing for accurate forecasts and actionable decisions. A recent CFO study commissioned by AGICAP, a leading provider of liquidity management solutions, and conducted by the market research institute Innofact AG, highlights the significant financial impact of inaccurate cash flow projections, particularly in the German Mittelstand.

According to the study, 33% of CFOs in mid-sized German companies report a lack of accuracy in their cash flow forecasts. This inaccuracy leads to missed investment opportunities on one hand and higher overdraft fees from banks on the other. In concrete terms, companies affected by these forecasting errors lose approximately €545,000 in annual revenue and pay around 88% higher overdraft interest rates compared to businesses with precise cash flow projections.

Furthermore, the study found that mid-sized German companies experience an average of 20 liquidity shortages per year, with 31% of affected businesses facing such issues on a monthly basis. The findings also reveal a stark contrast between the high importance CFOs place on cash flow management and the reliability of the systems they currently use for financial planning.²

In addition to the content-related factors highlighted in the CFO study—such as the persistently high volatility in raw material and energy costs in recent years, as well as changing credit conditions—it is primarily the technical limitations of today's commonly used planning tools that contribute to inaccuracies in cash flow forecasting.

Technical challenges in financial and liquidity planning

In the finance departments of mid-sized companies, planning solutions are often implemented using spreadsheet software, which typically provides only manual interfaces to key financial planning components such as the projected balance sheet, income statement, and other operational sub-plans like procurement, investment, or sales planning. As a result, financial and liquidity plans remain focused on specific reporting dates and must be manually updated whenever elements of corporate planning change. Consequently, financial and liquidity plans in practice often cover longer planning periods to minimize the need for mid-year adjustments. However, in crisis situations that require close monitoring of solvency and over-indebtedness risks, basic spreadsheet-based solutions lead to significant administrative effort in a dynamic environment.

Financial and liquidity planning is often only loosely connected to plan balance sheet and plan income statement, creating gaps in interpretation and forecasting. This weak integration affects the temporal interdependence between cash inflows and outflows on the one hand and their impact on financial results and asset values on the other. As a result, the consistency of forecast adjustments in the projected balance sheet or income statement can only be assessed in terms of their impact on cash flows³. Any inconsistencies in the evolution of individual planning components inevitably lead to a lack of plausibility in forecasting a company’s financial position, liquidity, and earnings. Additionally, between planning and forecast dates intra-year fluctuations in liquidity and financial status – caused by individual payment behaviors (e.g., specific customer payment patterns) – often remain undetected.

Lastly, decision-oriented visualization of planning and forecast data remains a frequent challenge in practice. Custom-built spreadsheet formats still dominate financial and liquidity planning presentations. However, according to a recent study by the European Association of Corporate Treasurers (EACT), real-time reporting and visualization are among the top priorities for European treasurers over the next 12 to 24 months.⁴

Effective crisis early detection trhough data-driven planning components

Financial and liquidity planning is an essential tool for identifying cash flow bottlenecks and insolvency risks at an early stage. This is particularly crucial in light of the tightened regulations under the German StaRUG (Corporate Stabilization and Restructuring Act) and the associated obligations for management to implement an effective crisis early detection system. To assess the legally defined grounds for insolvency, liquidity plans must include forecast periods of 12 and 24 months. Without a granular, time-based capture of cash flows – down to a weekly level – payment disruptions or temporary financing shortfalls may go unnoticed.

The individual behavioral profile of the company and its stakeholders plays a decisive role in this context. This profile is derived from cash-flow-relevant transaction data, taking into account historical or expected behaviors of stakeholders such as customers, suppliers, or banks. While incorporating behavioral profiles adds complexity to the planning process, it significantly reduces the risk of poor decision-making in times of financial distress. As a result, companies can create the necessary flexibility to take proactive measures in crisis situations.

Demand for integrated and intelligent planning solutions

Modern liquidity planning solutions integrate with bank accounts and ERP systems to analyze historical transaction data and accurately process individual cash inflow and outflow behaviors. With increasing levels of integrated data analysis and processing capabilities through advanced algorithms, software solutions are being leveraged to handle high planning and forecasting complexity. This allows for a shift away from broad assumptions based on key metrics such as Days Payables Outstanding (DPO) or Days Sales Outstanding (DSO) when forecasting cash flows, replacing them with more precise, profile-based behavioral patterns. The appropriate software setup enables real-time data retrieval and liquidity status assessment for any given time frame, significantly reducing the manual effort required for updates – particularly valuable for companies that need to engage in tight liquidity monitoring due to financial difficulties or imminent insolvency risks.

Additionally, these solutions help bridge the forecasting gap between the projected balance sheet and income statement on one side and liquidity and financial planning on the other, especially when planning adjustments are needed. Modern software solutions offer integrated modules that map out business plans, breaking down snapshot-based figures into specific periods, such as months or weeks, and synchronizing them with predefined cash flow patterns. This not only minimizes the effort required to reconcile sub-plans for financial position forecasts but also eliminates inconsistencies at their root, improving overall forecast accuracy.

The implementation of cash flow management applications also aligns with the growing demand from corporate treasurers for real-time, decision-oriented dashboards. Previously reliant on spreadsheets with standard charts, many treasurers now seek more dynamic tools. By leveraging real-time data retrieval from existing bank and ERP system interfaces, companies can display various data points instantly, providing the most up-to-date projections for more reliable financial forecasts.

New approaches for cash flow planning

Against this backdrop, the new partnership between AGICAP, one of the leading provider of cloud-based liquidity management solutions, and Rödl & Partner gains special attention.

AGICAP’s cloud-based planning solution is designed for rapid implementation, providing a powerful tool for cash flow management in a short time. Tailored specifically to the needs of mid-sized businesses, the platform seamlessly integrates into existing system landscapes. The software is structured into four core modules: Cash Flow Planning, Cash Management, Accounts Payables Automation (including payment processing), and Accounts Receivables Automation.

The primary focus of the application is to enhance cash flow performance. By leveraging historical transaction data and advanced algorithms, companies can optimize cash flows and actively manage key financial indicators such as Days Payables Outstanding (DPO) and Days Sales Outstanding (DSO). Unlike traditional static tools, AGICAP offers a dynamic and adaptable planning framework, enabling businesses to analyze and plan future cash flows not just at specific points in time but also across flexible time periods.

AGICAP also provides liquidity data access independent of traditional planning cycles. Financial data can be retrieved in real-time, allowing companies to make well-informed decisions without being restricted to fixed planning periods. This transparency forms the foundation for more precise scenario planning, accounting for both worst- and best-case situations. Additionally, a clear and transparent financial overview facilitates communication with banks and investors, leading to more efficient credit negotiations.

Furthermore, AGICAP offers features specifically designed for finance departments, replacing error-prone Excel-based solutions with automated processes. The software enables companies to generate reports and forecasts quickly and with full traceability. It also simplifies the integration of new customers and the management of financial topics such as factoring. By automating financial processes through real-time data integration, AGICAP supports operational excellence within organizations.

In the area of accounts payable management, AGICAP provides comprehensive tools for automating supplier invoice processing and payment workflows. With OCR scanning, automated verification and approval processes, and DATEV integration, companies can streamline their accounting processes. The accounts receivable management module allows businesses to analyze actual customer payment behavior and optimize dunning procedures. Companies can flexibly adjust payment terms and execute both individual and bulk payments directly through AGICAP or via EBICS (Electronic Banking Internet Communication Standard).

Conclusion: Intelligent liquidity management as success factor

Companies that embrace the digitalization of their financial and liquidity planning improve their forecasting and decision-making quality, unlock efficiency potential in the planning process, and gain a reliable control instrument for crisis scenarios. Additionally, in transaction scenarios where existing business units are transferred, a cash flow management tool can provide valuable insights into the financial resources of both old and new business segments.

The collaboration between Rödl & Partner and AGICAP offers customers a strategic advantage by combining expert financial advisory services from an auditing firm with AGICAP’s technical implementation expertise. Throughout the implementation process, we provide comprehensive support—from initial assessment and target concept development to professional guidance during the implementation phase, testing, go-live, and hypercare. Additionally, we focus on training employees, particularly in report development and scenario analysis.

For more information about the software solution, visit our cooperation partner's AGICAP website.

1 EACT Treausry Survey 2024

2 AGICAP CFO-Studie 2024, Fehlerhafte Cashflow-Prognosen verursachen Kosten für deutschen Mittelstand

3 Winnefeld, Bilanzhandbuch, 5. Auflage 2015; Rn. 1015

4 EACT Treasury Survey 2024