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Simulate the effects of different factors on your liquidity

Uncertain times make it difficult to predict the financial situation of your company. A fundamental element to consider is business liquidity. With our business liquidity simulator, you can quickly get a simulation of how your financial situation could evolve: What is the trend? Will it lead to the crunch? How could some external factors influence your business liquidity?

Business liquidity definition

A company's liquidity refers to how easily its assets can be converted into cash. Some assets, such as current accounts or bonds, are highly liquid as they can be converted to cash in a matter of hours or days, while others, such as property or equipment that would need weeks or months to sell, are less easily convertible.

Business liquidity management is fundamental for companies as generating cash quickly allows them to not only face sudden cash deficits or pay unexpected bills or debts, but also to run their operations and potentially expand their business.

Many factors can influence the liquidity of a company. For example, overtrading – when you sell more than you can make or can afford to produce – could alter your liquidity if you don’t have sufficient resources. Losing one of your biggest customers could also have a massive impact as it would reduce your revenue. If you can’t convert your assets into cash quickly, you may struggle to pay your bills and you may become insolvent.

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This Allianz Trade liquidity simulator tool is our proprietary and is protected by copyright. The Allianz Trade and Allianz logos are trademarks or registered trademarks belonging to the Allianz Group. Allianz Trade is the trademark used to designate a range of services provided by Euler Hermes. The use of our liquidity simulator tool is granted to you for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. Our Allianz Trade liquidity simulator tool should not be reproduced and its outputs should not be disclosed without our consent. Given that this tool uses assumptions which are simplified versions of business reality, it is only intended as an illustrated example showing the potential impact of a range of predefined factors. We make no representation nor warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Our tool’s features are subject to change without notice.The use of our liquidity simulator tool is granted to you for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. Our Allianz Trade liquidity simulator tool should not be reproduced and its outputs should not be disclosed without our consent. Given that this tool uses assumptions which are simplified versions of business reality, it is only intended as an illustrated example showing the potential impact of a range of predefined factors. We make no representation nor warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Our tool’s features are subject to change without notice.

How the business liquidity simulator works

First, complete the fields to reflect your current situation without taking into account the impact of any external negative factors:
  • Available liquid assets: your inventory, accounts receivable, stocks and unused lines of credit are examples of liquid assets – things you can quickly convert to hard cash
  • Monthly fixed costs: lease and rental payments, insurance, interest payments
  • Monthly variable costs: labour, commissions and raw materials
  • Monthly turnover
  • Number of sent invoices per month
  • One-off losses: the value of spoiled goods, for example


    To better understand how the business liquidity simulator works and how to simulate the impact of external factors on the liquidity of a company, fill in the fields below and click “Calculate”. You can also read our advice below the liquidity simulator.

Test various scenarios using the liquidity simulator 

Test out various scenarios to go further and see how different external factors could impact your business liquidity.

All you need to do is to fill in or modify some of the fields to simulate the potential impacts of reduced turnover, losses, drops in sales, unpaid invoices or payment delays on your liquidity. 

 

For example, ask yourself these questions:

    •  What percentage of my monthly turnover could be lost if my clients go insolvent?
    • Can I reduce any of my variable costs?
    • Are there any one-off losses I can foresee, for instance because clients will find alternatives or because I will have to destroy perishable goods? 
    • To what extent can I expect sales to drop on average over the next three months?
    • What is the proportion of unpaid invoices or bad debts I can expect over the next three months?
    •  What is the delay I can expect for payments from clients? 

Monitoring where and how money is spent is important when managing the liquidity of a company. Making cash flow forecasts  can help your liquidity management and prevent you from having to look for emergency solutions to avoid financial distress.

If you are concerned and wish to secure your cash flow, trade credit insurance remains the most complete and reassuring solution to support your  credit risk management and commercial development.

Would you like some advice?

I am here for you!

Dominique Haab
Senior New Business Underwriter

Allianz Trade in Switzerland
Richtiplatz 1
CH-8304 Wallisellen

Phone:        +41 44 283 65 48
Mobile:       +41 79 574 91 82
LinkedIn Profile
dominique haab

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