1. Understanding what Liquidity really means
Liquidity is not the same as profit. Your business can be profitable and you can still be short of cash. What matters is when money comes in – and when it goes out.
Important to know:
- Income ≠ available money
- Fixed costs continue even during slow periods
- Irregular payments are normal – dealing with them without a plan is not
💡 Mini-check:
Do you know how long (how many months) you could currently cover your running costs from your account?
2. Determine your Needs, without accounting Stress
You don't have to be a financial expert to be able to act. Even a rough overview helps you make better decisions.
Start with:
- your monthly fixed costs
- realistic average income
- recurring payments (taxes, insurance, rent)
💡 Action:
Note down a simple number: How much money do I need per month to work calmly?
👉 Our app helps you know your monthly needs precisely. Create your 3-minute financial plan now!
3. Accelerate Income
Your liquidity improves more by money arriving earlier than by more work. Small adjustments can have a big impact. Options are:
- shorter payment terms for your clients
- agreed advance payments at project start
- quick invoicing without delay after contract signing or service delivery
💡 Impulse:
Consider where you can receive money earlier and not just at project end.
4. Reduce Expenses strategically
Not every expense is bad, many bring you great benefit, but not every expense is necessary. The following levers can work:
- review fixed costs regularly
- question contracts and subscriptions (software tools, trade magazines etc.)
- reduce unnecessary complexity
💡 Reduction:
Identify one ongoing expense that you can pause, reduce or cut.
5. Adjust advance Payments realistically
Excessively high advance tax payments (Steuervorauszahlungen) burden liquidity unnecessarily. Especially with fluctuating income, a closer look is worthwhile.
Important to consider:
- advance payments are based on estimates or the figures from your last financial year
- they can be adjusted if needed
- an application is often more straightforward than expected
→ Also see our guide Adjusting your advance Payments
💡 Action:
Check whether your current advance payments match your real income situation – and have them reduced if necessary.
6. Build Reserves – even in small Steps
Reserves are not a luxury! They are a protection mechanism. Even small amounts create security and room for manoeuvre when less money comes in.
With the following steps you're on a good path:
- open a separate reserve account
- put aside a fixed percentage when money comes in (into the reserve account)
- build reserves for specific purposes → taxes, buffer, future etc.
💡 Routine tip:
Set aside part of every income automatically – even if it's little at first.
7. Stay on it instead of Troubleshooting
Liquidity problems rarely arise overnight, but usually gradually. In the same way, your liquidity can also be improved step by step.
Pay attention to:
- regular check-ins on financial needs and money inflow
- clear planning instead of perfection
- early action when bottlenecks are foreseeable
More liquidity means less pressure and more calm in everyday life. It's not about optimising everything – but creating enough room to manoeuvre.