1. From profit to cash flow: the liquidity forecast
Many SME entrepreneurs still steer too much towards the profit and loss account and the current balance at the bank. Profit is nice, but cash is king. And when growing working capital, costs come before benefits. Growth costs money before it generates returns. So make a rolling liquidity forecast now for the next 12 months. In doing so, don't count towards yourself. Be conservative in revenue and generous in cost estimates. In doing so, let go of the invoice date for a while and think about receiving actual payments
2. The MOT of your working capital
How long does it take for a euro you put into your business to come out with a profit? January is the month to take a critical look at your ‘Cash Conversion Cycle’.
- Debtors: Are payment terms structurally exceeded? Is your debtor management tight enough or are you (unintentionally) bankrolling your customers?
- Stock: Is there dead capital lying in the warehouse? Stock finance can give air here, but it starts with understanding the turnover rate.
- Creditors: Do you make the best use of payment terms with suppliers, or do you miss out on discounts for quick payment? This is where factoring can be a solution, for example.
3. Stress-test your plans
We live in a volatile economy. Interest rates, inflation and supply-chain disruptions can put pressure on your margin. Do a risk analysis. After all, what happens to your liquidity position if your biggest customer unexpectedly drops out? Also provide a buffer so that your funding mix can withstand a worst-case scenario. If the water is on your lips, it is often more expensive and more difficult to arrange financing.
4. Does your financial jacket still fit?
Many companies are growing out of their financing. The overdraft that was appropriate three years ago may now squeeze your current level of turnover. High time, then, for a reappraisal. Perhaps stacked financing is needed? Or can factoring move with your turnover better than a static bank credit. Know that a personal story and the right substantiation can make all the difference in your bank application. Banks are becoming more critical and processes are automated, the substantiation can make the difference between a ‘yes’ and a ‘no’!
To govern is to foresee
Entrepreneurship is about taking risks, but unnecessary financial risks are not one of them. By investing time in your financial planning and working capital position now, you ensure peace of mind during the rest of the year.
At Xolv Finance, we like to look with you. Not just at yesterday's figures, but especially at the space you need for tomorrow. Let's make 2026 a success together.