The war in Ukraine is hitting large parts of the economy with full force. There is hardly a company that is not directly or indirectly affected by the consequences. “Cash is king” is especially true in crisis situations, and liquidity management is a vital instrument for making liquidity bottlenecks transparent or averting insolvency if possible.

Professional liquidity planning shows the financial situation and the expected development. From this, various scenarios can be thought through in the extremely uncertain environment of the Ukraine crisis.

The first step is to analyze how strongly your company is affected directly or indirectly by the Ukraine crisis. What do the EU sanctions and halted trade relations mean for your own company? How do the sudden price changes affect the company? What does this mean for the profit situation and what does it mean for the liquidity situation? Some companies are discontinuing production because they can no longer produce economically with the increased energy costs or because the supply chains are unbroken. Other companies have so far only been indirectly affected, but how will the impact on business partners affect their own companies? There is a risk that liquidity risks will arise from deteriorations in creditworthiness and payment defaults, or that supply relationships will be terminated.

With a structured approach, management can estimate how the liquidity situation will change in different scenarios of expectation. The range of topics is wide and the dynamics on the markets are high. The assessment enables decisions to be weighed up in the best possible way and taken at the right time. Liquidity management helps to keep an eye on everything as well as possible and to be able to react quickly at any time.

At the moment, affected companies are driving on sight and keeping their money together. The rapidly changing influences on liquidity should be assessed on a daily basis and the expected effects included in the liquidity calculation. In most cases, the previous approach is no longer valid.

Liquidity planning – an indispensable management tool – not only in the crisis

Active liquidity management is part of the standard toolbox of every professional corporate management. Of course, digital tools support and focus not on daily adjustments, but on cash flows and their management.

THE MAK`ED TEAM is an expert for liquidity management systems and has already accompanied many small and medium-sized companies in Germany and abroad on their way through and out of the crisis.