Tracking a company’s liquidity is crucial for any entrepreneur or LLC, yet many owners often confuse revenue, profit, and cash on hand. Liquidity represents the company’s ability to meet all obligations on time – in other words, how quickly and easily it can pay bills, taxes, contributions, and salaries. Revenue is the money a company earns from selling its products or services, while profit represents the difference between revenue and business expenses, and does not automatically mean that the money is sitting in the account. Even if a company has high revenue and profit, it can still face liquidity problems if bills are larger or spread out over a longer period than the incoming cash. Therefore, it is important to regularly monitor account balances and plan cash flow in advance to avoid issues with unpaid obligations.

A practical way for an entrepreneur or LLC owner to track liquidity is simple: create a short record of planned revenues and expenses by month and compare them with actual cash inflows and outflows. This can be done using a simple Excel spreadsheet or accounting software like Minimax. It is important to record all expenses – taxes, contributions, rent, representation, and obligations to suppliers – and compare them with available funds in the account. Regular liquidity tracking allows timely action, planning for loans, or postponing non-urgent expenses, reducing the risk of late payments and loss of trust with partners. Transparent management of this record is the best prevention for keeping the company stable and avoiding financial problems that are not caused by lack of knowledge, but simply by unplanned cash flow.