Liquideiteitsforecast

Liquideiteitsforecast (Dutch for liquidity forecast) is a financial planning tool that estimates an organization's future cash position over a given horizon to determine its ability to meet short-term obligations.

It is a core component of treasury management and working capital planning. It supports funding decisions, cash management, and risk mitigation by identifying potential liquidity shortfalls and planning corrective actions in advance.

Forecasts are built from expected cash inflows (customer receipts, interest, asset sales, financings) and cash outflows (payments to suppliers, payroll, taxes, debt service, capital expenditures), with timing and amounts adjusted for seasonality and contractual terms. Approaches range from deterministic rolling forecasts to scenario or probabilistic analyses, sometimes using Monte Carlo simulations.

Outputs typically include projected daily or weekly cash balances, anticipated liquidity buffers, and triggers for action such as drawing on credit facilities or delaying expenditures. The forecast informs treasury decisions, debt covenants, and funding plans.

Common metrics include days cash on hand, cash burn rate, and forecast accuracy. Limitations include data quality, model assumptions, and reliance on external conditions. Regular updates, sensitivity analysis, and scenario planning help address uncertainty.

Liquideiteitsforecasting is part of broader liquidity risk management, integrated with financial planning and reporting. It may be mandated by regulators for banks or large corporations depending on jurisdiction.