How CFOs Can Improve Liquidity Planning
- Maano Capital
- Nov 18
- 6 min read
TABLE OF CONTENTS
Introduction: Why liquidity planning is critical for South African SMEs and the CFO’s role in strengthening financial resilience.
Why Liquidity Planning Matters for SMEs: The link between visibility, stability and lender confidence.
1. Build a Rolling 13-Week Cash Flow Forecast: A treasury-standard tool for short-term liquidity visibility and operational control.
2. Strengthen Working Capital Management: Practical debtor, creditor and inventory actions to improve cash flow discipline.
3. Conduct Liquidity Stress Testing: How CFOs can model adverse scenarios and prepare meaningful contingency plans.
4. Establish a Liquidity Governance Framework: Key controls, roles and reporting structures suited to SME environments.
5. Improve Data Quality and Forecasting Inputs: Why accurate financial data reduces forecast variance and supports decision-making.
6. Align Liquidity Planning With Funding Strategy: Strengthening funding readiness through disciplined liquidity processes.
7. Strengthen Treasury Capability: Building internal financial capability suited to SME and mid-market teams.
Conclusion: How disciplined liquidity planning improves resilience, funding readiness and long-term growth.
Introduction
Liquidity is the most decisive factor in whether a South African SME can navigate uncertainty, meet obligations, or secure funding when the opportunity arises. Many SME and mid-market companies operate with tight cash positions, incomplete forecasts, and limited visibility into short- and medium-term liquidity demands. For CFOs, improving liquidity planning is not merely a finance exercise. It is a strategic discipline that strengthens resilience, increases lender confidence and positions the business for sustainable growth.
In the South African context, where access to capital can be challenging and cash flow volatility is a daily reality, liquidity planning becomes a core component of financial capability. Strong liquidity planning enables a CFO to anticipate pressures before they materialize, prepare the organization for funding conversations, and ensure governance standards that align with lender expectations. Maano Capital’s advisory work in corporate finance, risk, and treasury repeatedly shows that the companies with the highest liquidity clarity are the ones that secure better capital outcomes and handle market shocks with far greater stability.
This article outlines practical, fact-based steps SME and mid-market CFOs can take to improve liquidity planning. Each recommendation draws from standard treasury practice, lender expectations and established financial governance principles, all aligned with Maano Capital’s service pillars.
Why Liquidity Planning Matters for SMEs
SMEs often have limited buffers. A single delayed payment, unexpected cost spike, or seasonal downturn can create immediate pressure. Strong liquidity planning helps a CFO achieve three outcomes:
Visibility. Clear sight of expected inflows, outflows and obligations across short, medium and long horizons.
Stability. Reduced likelihood of cash crunches and improved operational continuity.
Credibility. Lenders and investors value disciplined liquidity planning, which improves the organisation’s funding readiness.
For SMEs seeking finance, liquidity planning is often a key determinant of whether funders view the business as capable of honouring obligations. Many funding applications fail because cash flow projections are incomplete, unrealistic, or unaccompanied by liquidity controls. A CFO with strong liquidity processes avoids these pitfalls.
1. Build a Rolling 13-Week Cash Flow Forecast
A rolling 13-week forecast is a cornerstone treasury tool used to manage short-term liquidity. It provides weekly visibility into inflows, outflows and closing balances.
For SMEs, this tool offers practical benefits:
It highlights weeks where liquidity dips below safe thresholds.
It provides a forward-looking view, supporting better operational decisions.
It creates discipline around monitoring and adjusting assumptions.
A CFO should ensure the following:
Forecasts are updated weekly with actuals replacing estimates.
Inflows are categorised by customer, expected receipt date and probability.
Outflows are tagged by type, vendor and contractual obligation.
Variances are analysed weekly to improve forecast accuracy.
Lenders often request 13-week forecasts when evaluating SME funding readiness because it gives insight into financial discipline. CFOs who maintain accurate short-term liquidity views are better positioned to negotiate on favourable terms.
2. Strengthen Working Capital Management
Working capital pressures are one of the most common causes of liquidity strain in SMEs. CFOs can improve liquidity by tightening operational practices relating to debtors, creditors and inventory.
Key areas of focus:
Debtors
Enforce stricter credit terms, especially for high-risk customers.
Introduce early-payment incentives where appropriate.
Implement structured follow-up processes to reduce overdue accounts.
Creditors
Renegotiate payment terms with suppliers where possible.
Align payment cycles with major inflows.
Ensure no unnecessary early settlements affect liquidity.
Inventory
Reduce slow-moving stock.
Improve forecasting to avoid over-ordering.
Tighten controls that influence carrying costs.
Working capital management directly supports liquidity optimisation. CFOs who treat working capital as an ongoing operational discipline, rather than a once-off clean-up exercise, reduce unnecessary cash strain.
3. Conduct Liquidity Stress Testing
Liquidity stress testing is a standard risk-management practice. It measures how the business performs under adverse scenarios such as late customer payments, sudden expense increases or unexpected disruptions.
A practical SME-oriented stress test includes:
A 20 to 30 percent delay in major customer receipts.
A two-month sales downturn.
A once-off cost spike such as repairs, compliance costs or staffing.
Interest rate sensitivity for businesses with debt exposure.
The CFO should identify how each scenario affects cash runway, working capital and covenant compliance if loan agreements are in place.
Stress testing provides an early warning system. It allows the CFO to prepare contingency plans such as cost reductions, credit lines, cash reserves or negotiations with suppliers. Funders often ask if stress testing is performed because it reflects the organisation’s risk governance maturity.
4. Establish a Liquidity Governance Framework
Liquidity planning is most effective when supported by governance structures. Even SMEs benefit from formalising liquidity policies and controls.
Elements of a sound liquidity governance framework include:
Clear roles and responsibilities within the finance team.
Defined liquidity thresholds and triggers.
Approval processes for large payments.
Scheduled liquidity reviews and reporting cycles.
Documentation of assumptions and scenario outcomes.
A governance framework increases internal discipline and improves transparency when engaging with lenders, investors or auditors.
5. Improve Data Quality and Forecasting Inputs
Liquidity planning is only as accurate as the data behind it. Many SMEs struggle with inconsistent or incomplete financial data, which weakens forecasting accuracy.
CFOs can improve data quality by:
Standardising chart-of-accounts structures across systems.
Ensuring accurate debtor and creditor ageing reports.
Reconciling bank accounts more frequently.
Improving communication between finance and operational teams.
Using financial modelling practices to validate assumptions.
Clean, reconciled and verified data reduces forecast variance and supports stronger liquidity insights. It also demonstrates financial capability during funding applications.
6. Align Liquidity Planning With Funding Strategy
Liquidity and funding are closely linked. A business with strong liquidity planning presents itself as better prepared for debt or investment, while poor liquidity visibility creates uncertainty for funders.
CFOs should ensure that liquidity planning aligns with the business’s broader funding strategy by:
Identifying future funding needs early.
Preparing financial information in formats used by lenders.
Performing funding readiness assessments.
Ensuring forecasts are consistent with business plans.
Maintaining governance practices that lenders recognise.
Maano Capital supports many SMEs with capital-raising preparation, and one of the most common issues is misalignment between liquidity forecasts and the narrative presented to potential lenders. A CFO who aligns liquidity planning and funding readiness significantly improves the company’s probability of securing capital.
7. Strengthen Treasury Capability
Even within SMEs, treasury capability matters. It does not require a large department, but it does require skills, processes and structure.
CFOs can strengthen internal treasury capability by:
Training team members in liquidity management and risk concepts.
Introducing basic treasury controls.
Using independent financial assessments to test existing processes.
Implementing simple treasury governance tools used in larger corporates.
Increasing treasury capability builds long-term resilience and improves the organisation’s ability to respond to financial pressures.
Conclusion
Liquidity planning is not an optional exercise for SME and mid-market CFOs. It is a core capability that supports operational stability, funding readiness and financial resilience. By applying structured forecasting, improving data quality, strengthening governance, managing working capital more rigorously and aligning liquidity plans with strategic objectives, CFOs create stronger, more investable businesses.
Maano Capital’s advisory services in liquidity management, funding readiness and treasury governance are built specifically to support South African organisations facing these challenges. CFOs who proactively improve their liquidity planning position their businesses for growth, resilience and better capital outcomes.
FAQS
How CFOs Can Improve Liquidity Planning
How can SMEs strengthen short-term liquidity planning?
By building a rolling 13-week cash flow forecast, improving working capital discipline and reviewing liquidity weekly. These steps give CFOs clear visibility of upcoming inflows and outflows.
Why is liquidity planning important when applying for SME funding?
Funders assess whether a business can honour repayment obligations. Strong liquidity forecasts improve credibility and increase the likelihood of approval.
What tools should CFOs use to manage liquidity effectively?
Standard tools include 13-week cash flow forecasts, liquidity stress testing models, working capital dashboards and treasury governance controls.
How does liquidity stress testing help SMEs manage financial risk?
Stress testing shows how the business performs under adverse scenarios such as delayed customer receipts or sales drops. CFOs use the results to prepare contingency plans.
What role does data quality play in liquidity planning?
Clean and accurate financial data reduces forecast variance and provides reliable insights for decision making. It also strengthens funding readiness.
How can CFOs align liquidity planning with funding strategy?
By identifying future capital needs early, ensuring forecasts match business plans and preparing financial information in formats lenders expect.
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