What is a liquidity plan?

A liquidity plan is a forward-looking projection of your cash availability over time. It answers the question: Will we have enough cash to operate, and grow, over the next few weeks and months?

Here’s what it is not:

• It’s not your profit & loss statement
• It’s not your budget
• It’s not just a static forecast

A good liquidity plan combines your current bank balances, expected cash inflows and outflows, and planning assumptions into a live, updating view of your runway.

Done right, it becomes your most critical financial signal, especially when growth eats cash.

Why every startup needs one

At €1M ARR, you’re usually still fundraising.

At €10M, you're scaling and hiring. In both cases, liquidity is under pressure and often not 100% predictable.

You need a liquidity plan if:

• Your burn rate fluctuates with hiring or ad spend
• Your revenue is recurring, but collection delays hit cash timing
• You’re managing multiple funding sources (equity, grants, debt)
• You need to know whether to raise now or wait 6 months

Real example:

A €6M ARR SaaS startup with 30% MoM growth delayed their next equity round by 4 months after using a liquidity plan to reduce burn and extend runway. That bought them better terms and more leverage at the table.

1. Gather the inputs

Before you can plan liquidity, you need to collect the right data. This isn’t just accounting data—it’s operational, financial, and strategic.

Here’s what you need:

The goal is actionable fidelity. Your first version will be rough. That’s fine. The real value comes when you start updating it weekly.

2. Choose your time horizon

You don’t need one liquidity plan. You need two:

• Short-term (e.g. 13 weeks): weekly view for tactical decisions
• Long-term (e.g. 12-18 months): monthly view for strategic planning

Think of short-term as headlights and long-term as your roadmap. Use both to navigate in real time and steer toward your goals.

When should you go weekly? If your cash inflows/outflows are uneven, or your burn rate is volatile, weekly granularity is a must.

3. Forecast with logic, not gut feeling

Now build the actual model:

1. Start with today’s bank balance
2. Add cash-ins: MRR, new contracts, expected funding
3. Subtract cash-outs: payroll, rent, AWS, annual contracts, etc.
4. Include one-offs and anomalies (e.g. VAT refunds, debt repayments)
5. Layer in assumptions (churn, collection delays, hiring ramps)

Then build scenarios. Your base case won’t always happen.

If you’re doing this in Excel, expect manual pain. Tools like re:cap automatically connect your bank data, receivables, forecasts, and funding into a live liquidity model. That means less spreadsheet wrangling and more strategic clarity.

4. Use it for capital decisions

Once your liquidity view is live, use it as your decision engine:

• Can we hire now, or in 3 months?
• Do we need to raise this quarter?
• Can we reduce burn to extend runway without hurting growth?

Link it to working capital planning:

• Speed up collections to smooth cash-in
• Delay or renegotiate payments without hurting ops
• Plan debt usage around predicted gaps

A strong liquidity plan isn’t just a report. It’s a negotiating tool, a growth map, and a sanity check rolled into one.

5. Keep it updated (or risk flying blind)

Liquidity planning is not a one-time event. Your forecast will decay the minute something changes.

Set a simple cadence:

• Weekly: Finance team updates actuals and revisits assumptions
• Monthly: Sync with leadership to realign strategy
• Quarterly: Tie into board planning and capital strategy

Monitor:

• Cash runway (in weeks/months)
• Net burn
• Variance from forecast

6. Mistakes to avoid

Here’s what derails liquidity planning fast:

• Overly optimistic revenue assumptions
• Ignoring B2B payment behavior (30/60/90-day lags)
• Siloed planning (finance ≠ ops ≠ sales)
• Forecasting in spreadsheets that never get updated

Summary: Liquidity plan for startups

• Liquidity planning is survival planning.
• Start with what you know (balances, revenue, costs).
• Build short- and long-term forecasts.
• Update regularly and plan multiple scenarios.
• Use tools to reduce manual work and improve confidence.

Q&A: Liquidity plan for startups

What is a liquidity plan for startups?

It’s a rolling forecast of your cash availability, showing when you’ll run out and how to avoid it.

How is a liquidity plan different from a budget?

Budgets are static. Liquidity plans are dynamic, updated weekly, and directly tied to cash movement.

What tools help with liquidity planning?

re:cap integrates your bank accounts, invoices, revenue forecasts, and funding data, so you can model liquidity scenarios in real time. However, you should always compare different providers to see what fits your use case.

How often should I update it?

Weekly. Your liquidity plan should evolve with your business.

When should I start planning liquidity as a startup?

As soon as possible. Even at €1M ARR, visibility into cash is essential for funding, hiring, and growth planning.