What is liquidity planning?
Liquidity planning is used to compare the company's expected income and expenses as of an exact date. It is therefore is a type of early warning system for any potential liquidity bottlenecks and ensures that the company remains solvent for the foreseeable future. It also shows how much available liquidity can be generated in the short term, medium term, and long term.
This is essential during the startup phase, because expenses for wages and materials will be incurred from the very first month. However, it may be several months before payments start to come in.