How can I optimize my balance sheet to improve my liquidity?
August 31, 2022 | 40,00 EUR | answered by Laura Hohenwarter
Dear tax consultant,
My name is Fanni Hartmann and I run a small retail business. In recent months, I have noticed that my liquidity is becoming increasingly tight and I am having trouble covering my operating costs. I have looked at my balance sheet and realized that my current assets are relatively high in relation to my total assets. On the other hand, my equity is too low and my long-term liabilities are putting additional strain on my balance sheet.
Because of this situation, I am concerned about the future of my business. I would like to optimize my balance sheet to improve my liquidity and regain financial stability. What measures can I take to reduce my current assets and strengthen my equity? Are there ways to reduce or refinance my long-term liabilities to ease the burden on my balance sheet?
I would greatly appreciate your professional assessment and specific recommendations on how I can improve my balance sheet structure to increase my liquidity and lead my business to long-term success.
Thank you in advance for your support.
Best regards,
Fanni Hartmann
Dear Mrs. Hartmann,
Thank you for your inquiry regarding optimizing your balance sheet structure to improve your liquidity and achieve financial stability. It is important that you address this issue early on in order to be successful in the long term. I will be happy to provide you with some measures and recommendations to optimize your balance sheet.
First and foremost, it is important that you reduce your current assets to improve your liquidity. For example, you could optimize your inventory levels and see if it is possible to reduce them. Improving accounts receivable management processes can also help you access customer payments more quickly. Additionally, you could optimize your payment terms with suppliers to reduce your current assets.
To strengthen your equity, you may consider raising fresh capital from external investors or banks. Converting profits into equity can also help improve your equity ratio. Furthermore, you could consider a capital increase by injecting additional equity.
Regarding your long-term liabilities, there are various ways to reduce or refinance them. For instance, you could negotiate with your creditors to improve the terms of your liabilities. Refinancing with another bank or taking out a cheaper loan could also be an option to relieve your balance sheet.
It is important that you consult with a professional tax advisor or financial expert to analyze your individual situation and develop concrete measures. Together, you can create a financial plan to optimize your balance sheet structure and improve your liquidity.
I hope these recommendations help you and allow you to stabilize your financial situation. If you have any further questions or need support, please do not hesitate to contact me.
Best regards,
Laura Hohenwarter
