A business based in Al Sulaimaniyah can forecast its cash position accurately and still have no plan for the week the forecast turns out wrong.

Where cash forecasting answers what the position will be, liquidity planning answers what to do about it: how much headroom to hold, in what form, and what the sequence of responses is if a shortfall emerges. Businesses that skip this arrive at a funding gap with no plan and negotiate facilities from a weak position.

Defining the liquidity buffer

How much headroom is enough is a judgment, not a formula, and it depends on cash flow volatility, the concentration of receipts among a few large customers, and how quickly committed facilities can actually be drawn. A contracting business dependent on three main contractors needs materially more buffer than a distributor with hundreds of customers on short terms, and setting the target deliberately is better than discovering it during a squeeze.

Facility structure and headroom

Liquidity comes from cash balances and from committed facilities, and the mix matters. Undrawn committed facilities cost commitment fees but provide certainty; uncommitted lines cost nothing until used but can be withdrawn precisely when needed. We map current facilities by type, tenor, covenant and drawdown mechanics, which frequently reveals that headroom nominally available is less accessible than assumed. This connects to debt advisory where the overall structure needs rethinking.

Stress testing

The plan is tested against scenarios drawn from realistic business risk: the largest customer paying sixty days late, a major receipt slipping a quarter, a facility not being renewed. The output is not a probability but a set of trigger points and pre-agreed actions, so that a response is executed rather than debated when a scenario begins to materialize.

A common Saudi scenario

A Riyadh services group holds what leadership considers comfortable cash, then a government client delays payment on two contracts simultaneously. Liquidity planning would have identified that concentration among a small number of large public sector receipts was the group's dominant liquidity risk, and that its overdraft facility was uncommitted and reviewable annually. Both facts were knowable in advance and neither had been examined.

Ongoing governance

Liquidity planning is reviewed quarterly and after any material change: a new facility, a large contract win, a change in customer payment behavior. It also connects to enterprise risk management, since liquidity is usually among the top risks on a Riyadh group's register and one where the mitigation is concrete and testable rather than aspirational.

Communicating the position to lenders

Banks respond better to a business that arrives with a considered liquidity plan than one that arrives needing money. A plan showing stress scenarios, defined triggers and pre-agreed responses signals competence, and it is materially easier to secure or extend a facility before it is needed than during a squeeze. This is a large part of why liquidity planning connects directly to bank financing conversations and to how the group's overall debt structure should be shaped.

Local context

Businesses dependent on government and semi-government contracts across Riyadh face the most pronounced receipt-timing risk.