Liquidity and cash flow management

A business can be profitable on paper and still find itself in trouble because it does not have the money to pay salaries, suppliers and taxes at the right time. Profit and liquidity are not the same thing: the income statement measures profitability, cash measures survival. Managing cash flow means ensuring that, at every moment, there is enough liquidity to meet commitments.

Why profit and cash diverge

The difference stems from timing. You sell today but collect in 60 days; you record the revenue immediately, but the cash arrives later. In the meantime you have already paid suppliers and salaries. Other elements widen the gap:

Investments in machinery or fixed assets: money goes out today, but on the income statement it is spread over time as depreciation.
Inventory: capital tied up in the warehouse that has not yet become revenue.
Taxes and withholding tax: periodic outflows that must be planned, as must AHV (state pension) adjustments and BVG (occupational pension) contributions.
Debt repayments: the principal portion is not a cost, but it is a real cash outflow.

Those who look only at profit do not see these dynamics. Those who manage liquidity anticipate them.

Cash-flow forecasting

The central tool is liquidity planning: a forecast, usually weekly or monthly, of all expected inflows and outflows over a horizon of several months. It serves to answer a simple but vital question: will I have enough cash in every period?

A useful forecast starts from the opening balance and adds, period by period:

Expected collections from clients, taking into account real payment times.
Fixed outflows: salaries, rents, social security charges, leasing.
Variable outflows: purchases, suppliers, taxes, VAT to be paid to the FTA (Federal Tax Administration).

The result shows in advance the periods of strain — for example, the month in which the thirteenth salary, the tax instalment and a large supplier payment coincide — and gives you time to act before they become a problem.

Working capital: the most concrete lever

Much of an SME’s liquidity is trapped in working capital: receivables from clients, inventory and payables to suppliers. Acting here frees up cash without the need for external financing:

Reduce collection times: invoice immediately, use the QR-bill to speed up payments, set clear terms and follow up methodically. Every day of collection gained is cash that comes back sooner.
Optimise inventory: avoid excess stock that ties up money without generating revenue.
Manage payments to suppliers: use the agreed terms without paying early unnecessarily, but without ruining relationships or losing worthwhile discounts.

These three levers, often overlooked, are worth more than many financial operations.

Reserves and credit lines

Prudent management provides for a liquidity buffer proportionate to the volatility of the business: the more irregular or seasonal the flows, the larger the reserve must be. Alongside your own cash, having a credit line negotiated with the bank before you need it is an insurance policy against the unexpected. The best terms are obtained when the accounts are solid, not when the water is already up to your neck.

Warning signs to monitor

Systematic recourse to delays in payments to suppliers and taxes to make the month balance.
Client receivables growing faster than turnover: it means you sell but collect poorly.
Rising profit but cash that does not improve: almost always a working-capital problem.
No forecast beyond a few weeks: you are navigating blind.

From accounting to decision-making

Well-managed liquidity does not come from an isolated Excel sheet, but from up-to-date accounting that feeds reliable forecasts. If the accounts are closed months late, any forecast starts from old data. Current accounting and liquidity planning are two sides of the same work.

How we work

At SIH ONE we connect current accounting — pre-processed by our AI systems and validated by a qualified professional — to up-to-date liquidity planning, so you see the critical months in advance and act on the right levers: collections, inventory, suppliers and, when needed, financial instruments. The goal is not just to be profitable, but never to run out of cash.

Do you want a clear view of your cash flow for the coming months? Let’s build it together.