SAP B1 blog

What is "liquidity" anyway - and why is it not enough to do "something with numbers"?

Liquidity does not simply mean "money", but the ability of a company to fulfil its short-term payment obligations on time. It is not relevant how well the Profit and Loss Account but whether there is enough in the account at the end of the month to pay wages, taxes or the next leasing instalment.

Two approaches help with the assessment:

• Static liquidity: a snapshot - "How are things right now?"
• Dynamic liquidity: a film - "What comes in, what goes out? And when exactly?"

If you only look at past transactions, you may only notice the problem when the account balance lights up red.

Why even profitable companies can go bankrupt

Many SMEs regularly fall into the same trap: they confuse profit with liquidity. A turnover has been made - but whether the customer will pay on time? Unclear. Or investments are made - in new machines, Stocks or marketing measures. It's just a shame if the next project is a long time coming and there are no reserves.

How to risk your liquidity

• Late payments received despite completed performance
• High fixed costs (rents, salaries, licence fees) with irregular income
• Zero cash reserves for unforeseen events such as additional tax payments or machine breakdowns
• Chaotic dunning processwhich is more reminiscent of polite enquiries than of a systematic Receivables management

Strategies for solid liquidity planning

If you want to seriously avoid cash flow bottlenecks, you need more than just a glance at your bank account. A few tried and tested methods can help:

Forward-looking forecasts

Cash flow forecasts not only show how things currently look, but also how the situation will develop. Historical data, outstanding invoices and planned expenditure must work together. Tools such as SAP Business One offer real transparency here: including timelines, weighting of the probability of incoming payments and Drilldown down to document level.

Consistent dunning process

A well-groomed Dunning is not a sign of aggression, but of professionalism. Those who clearly communicate when payment should be made - and what happens if this does not happen - are served more quickly. SAP Business One allows you to define dunning levels, minimum amounts and interest on arrears. If you set it up skilfully, you save yourself the hassle of phone calls.

Inventory management with foresight

Too much stock ties up capital, too little leads to bottlenecks. The art lies in balance. Intelligent Inventory management - whether manually or via ERP - creates clarity about what is needed when and where things are stacked. This is particularly important in the event of seasonal fluctuations or unstable supply chains.

Building up reserves for more liquidity

Sounds banal, but it's essential for survival: a liquidity cushion. Ideally, the reserves should be sufficient for at least three months of operation. If you can manage this, you can sleep soundly - even if a major customer pays later or an unplanned expense intervenes.

Secure your credit line - before you need it

Banks love predictability. Those who negotiate in good times get better conditions. A prepared overdraft facility or a flexible financing line gives you room for manoeuvre when things get tight in the short term.

How SAP Business One gets a grip on liquidity

Anyone using SAP Business One has powerful tools at their fingertips - provided they are set up correctly. Particularly noteworthy:

• cash flow-Reports combine actual postings with pre-recorded documents, drafts and framework agreements. The result: a more realistic view of future liquidity.
• Cash flow forecast tool with timeline and adjustable security level - depending on how likely it is that payment will be received.
• Actual cash flow reportwhich breaks down historical developments and can be traced back to individual booking level.
• Credit and exposure limits for customers to limit the risk. Sounds bureaucratic, but works wonders for risk management.

And not to forget: The Dunning can be controlled centrally, with escalation levels and automated generation of reminders. If you configure it properly, you save money - and nerves.

Versino Financial Suite: Liquidity management with a sharp toolbox

While SAP Business One already offers comprehensive options for cash flow planning, the Versino Financial Suite liquidity management to a higher level - with a set of tools that are precisely tailored to the practical needs of SMEs. Those who use a pocket knife here now have a scalpel.

Netting: Why pay back and forth when you can simply net?

The netting function is more than just an accountant's gimmick - it is a clear contribution to liquidity optimisation. Companies that have both receivables and payables with business partners can use this function to net them out. In concrete terms, this means that instead of transferring money several times, only the net amount remains - it could hardly be more efficient.

Netting can be carried out manually, semi-automatically or fully automatically. The suite provides a complete overview of the business partners involved, shows balances and automatically generates difference postings in the SAP payment proposal. The result: lower transaction costs, less reconciliation effort - more clarity.

Payment behaviour report: early warning system instead of coffee grounds reading

Another highlight is the Report on payment behaviour. It analyses the payment behaviour of your customers not only in the current financial year, but over longer periods of time. This allows trends to be recognised at an early stage: Who regularly pays late? Who is moving in the wrong direction?

These findings are worth their weight in gold - because they help to identify liquidity bottlenecks early on and prioritise action in the dunning process. Instead of relying on gut feeling, the report provides concrete figures.

Open items with foresight: OP lists with real added value

The operating theatre overview in the suite is not a boring graveyard of figures, but a powerful analysis tool. It shows:

• Dunning levels and dunning date
• Blocked customers (marked in colour)
• Average payment delays
• Agreed payment terms

Particularly worth mentioning: Even Advance invoices are correctly mapped - a detail that many standard solutions ignore. This gives you a realistic picture of your outstanding receivables and allows you to organise your liquidity planning in a much more targeted manner.

Payment notifications and balance confirmations: Communication that makes cash

Even if it may seem unimportant at first glance, the Automated creation of Payment advice contributes to liquidity management. How? By reducing queries and avoiding misunderstandings - which in turn speeds up processes and prevents unnecessary delays.

The same applies to the Balance confirmation as of the reporting date. Generated directly from SAP Business One, it not only helps with reconciliation with business partners, but also creates the basis for reliable liquidity data - cleanly reconciled accounting included.

Bank statement processing for current liquidity

The extended Bank statement processing of the suite offers an automated interface to the banking software. This means that account balances are not only up-to-date, but also available at all times - a basic requirement for daily liquidity monitoring.

Financial Cockpit - the control centre

In addition, the Financial CockpitThis is where all the important figures come together. Debtor and creditor balances, account sheets, posting journals - everything is clearly organised, centralised and available at any time. Control over your payment flows has never been so tangible.

Accruals and deferrals and exchange rate updating

The Versino Financial Suite also performs well on the quieter side of liquidity planning. The Automatic accruals and deferrals for an accrual-based presentation of expenses and income - which in turn presents the financial situation more precisely and secures planning.

In addition, the Daily update of the Exchange rates About the ECB ensures that foreign currency items are always valued correctly. This prevents liquidity forecasts from being jeopardised by exchange rate errors, particularly in international business relationships.

DATEV interface: Without media discontinuity to external accounting

Not to be underestimated is the seamless DATEV interfacewhich extends SAP Business One with the option of reliably transferring accounting data to tax consultants or your own accounting department. This seamless integration avoids duplicate entries, reduces error rates and creates a consistent database for liquidity planning.