Forecasting Under Pressure: Liquidity Is a Planning Discipline
As financial pressure intensifies, cash protection depends less on reactive cuts and more on proactive planning. Mature finance teams are closing the gap between insight and action using faster forecasts and real-time scenario modelling to respond early and preserve liquidity.
When cash is under pressure, finance leaders could be forgiven for focusing on the obvious levers – cutting costs, freezing spend, deferring investment.
However, behind every financial response is a planning reality. How quickly can the business reforecast? How clearly can you see what’s causing the pressure? And how confident are you that the numbers still reflect the reality of what’s happening within the business?
Unsurprisingly, many organisations are feeling the strain. While the data exists, it’s often out of step with what the business needs. Perhaps forecasts arrive after the conversation has moved on, or scenario planning is deprioritised because the model isn’t flexible or trusted enough to inform a real decision. In this kind of environment, even strong insights can arrive too late to be useful.
When planning falls out of sync with operations, the risk extends beyond lost visibility and into the dangerous realm of poor decision-making. Delays or action based on outdated assumptions can all have a material impact on cash.
In more mature finance functions, planning moves at the speed of the business. Forecasts are refreshed regularly, assumptions are tested early and finance partners work closely with operational leaders to guide decisions before they are made. This planning discipline allows decision-makers to protect liquidity and avoid the downstream cost of missteps made under pressure.
Planning maturity shapes decision-making
Of course, discipline on its own isn’t enough. Planning capability depends not just on how often you review the numbers, but on how reliable and timely those numbers are to begin with. When inputs are fragmented, outdated or unclear, the risk of missteps – and their financial consequences – increases.
That risk grows in environments where conditions change weekly, or even daily. A forecast that takes two weeks to prepare may still be accurate on paper, but no longer useful in practice. With finance leaders contending with both accuracy and speed, even sound decisions can lose value if they arrive too late to act on.
This has a direct financial impact. Gartner estimates that poor data quality costs organisations $15 million a year on average, with consequences that show up in missed signals, ill-timed investments and unplanned pressure on liquidity. For finance partners to the rest of the business, the job is to close that gap by creating the rhythm and responsiveness that allow decisions to keep pace with change.
What good looks like in practice
Finance teams with transformational planning maturity stand out for treating cashflow as a planning outcome, rather than an end-of-month reporting exercise. Liquidity is managed through the everyday work of planning – when to spend, where to invest and how to respond when something changes.
Teams that review and refresh forecasts frequently, alongside operational and commercial leaders, are better positioned to identify pressure points early and adjust before they escalate. When assumptions are tested regularly and aligned with what’s happening on the ground, liquidity decisions become more deliberate and less reactive.
Finance scenario modelling becomes more valuable when it is part of the regular planning cadence. Instead of building the usual three static scenarios once a year – best case, worst case, base case – mature teams are using targeted modelling to support more sophisticated decision-making. What happens if payment terms stretch another 15 days? What is the impact on cash, margin or workforce if a planned investment is delayed? The true value here extends beyond protecting margin, and into preserving optionality – the ability to delay, accelerate or redirect decisions as conditions evolve.
This early involvement matters. When finance is brought into the conversation after a decision is made, the room to act is already limited. However, when they are engaged from the outset, trade-offs can be modelled in real time, and cash can be protected before it leaves the business.
Maturity matters under pressure
Cash pressure isn’t always a signal to stop spending. Often, it’s a sign that the business needs better visibility and planning, to unlock earlier conversations about trade-offs. The role of a mature, transformational finance function is to make that possible, by ensuring decisions happen early enough, with the right information to protect liquidity.
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