Business liquidity is put under pressure during a period of crisis, making effective liquidity management a must for all businesses. The liquidity of a company measures its capacity to raise cash to settle current liabilities, and it’s important to understand the status of your cash liquidity today and in the coming months.

Effective business liquidity management helps you to generate cash quickly in the face of expected cash deficits, such as unpaid debts, and even fuel business expansion.

The Covid-19 crisis has induced a sharp drop in liquidity for many firms; in some cases triggering bankruptcy for solvent but illiquid businesses.

An ongoing assessment of available cash and business liquidity is therefore essential.

You can use our business liquidity calculator to test your incoming and outgoing cash flows and model worse case scenarios and downsides, including drops in sales or an increase in customer defaults.

Simply complete each field in the liquidity calculator to model liquidity over time and simulate changes in cash liquidity impacted by various trading variables.

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This tool is proprietary to Euler Hermes Group SAS, registered in Nanterre (552 040 594), a Company of Allianz, and is protected by copyright. Euler Hermes and Euler Hermes’ logo are trademarks or registered trademarks belonging to Euler Hermes Group, worldwide. The use of this tool made available by Euler Hermes Group SAS is granted for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken solely relying on it. This tool should not be reproduced or disclosed without our consent. Given that this tool, that uses assumptions which are simplified versions of business reality, is only intended as an illustrated example showing the potential impact of a range of predefined factors, Euler Hermes makes no representation or warranty (express or implied) of any kind, as regards to the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on this information. This tool is subject to change without notice. © Copyright 2021 Euler Hermes. All rights reserved.

As a first step we recommend you complete all fields to reflect your current business liquidity, without taking into account the impact of any new negative external factors.

Then select ‘calculate’ to populate the graph showing liquidity over time.

Here’s an explanation of some of those fields:

  • Available liquid assets: your inventory, accounts receivable, stocks and unused lines of  credit are examples of liquid assets – things you can quickly convert to hard cash.
  • Monthly fixed costs: lease and rental payments, insurance, interest payments
  • Monthly variable costs: labour, commissions, and raw materials
  • One-off losses: the value of spoiled goods, for example

Once you’ve understood your current business liquidity, why not begin to model worst case and best case scenarios to understand future liquidity scenarios?

For example, what would the impact on business liquidity be if:

  • Defaults increased / increased?
  • Sales increased / increased?
  • Payment delays increased / increased?
  • Monthly costs increased / increased?

If you’re concerned about bad debts holding your business back you can speak to use about protecting your receivables using credit insurance.

We’ll help you assess if it’s a good fit for your business. Simply complete the form below.