Liquidity Planning for the Self-Employed: How to Stay Solvent

Did you know that poor liquidity is the most common reason for business failures in Switzerland? According to the Federal Statistical Office, thousands of companies go bankrupt every year — not because they lack orders, but because they can no longer pay their running bills. Self-employed individuals and sole proprietors are particularly vulnerable: irregular income, late customer payments, and unexpected tax demands can quickly lead to a liquidity crunch.

The good news: With proper liquidity planning, this risk can be drastically reduced. In this article, we show you what liquidity planning means, which traps to watch out for, and how to create a solid liquidity plan in 5 steps.

01What Is Liquidity Planning?

Liquidity planning means systematically planning when and how much money flows in and out. The goal: ensuring you always have enough liquid funds to meet your obligations — rent, insurance, AHV contributions, taxes, suppliers, and everything else.

The difference from profit is crucial: You can be profitable on paper and still run into a liquidity crunch. Example: You issue an invoice for CHF 15,000 in January, but the customer doesn't pay until April. Your fixed costs, however, continue every month. Without reserves, things get tight. With the right payment terms and conditions, you can counteract this.

Liquidity ≠ ProfitProfit shows whether you earn more than you spend in the long run. Liquidity shows whether you can pay your bills today. Both are important — but liquidity determines your short-term survival.

02The 5 Most Common Liquidity Traps

As a self-employed person in Switzerland, there are typical situations that threaten your liquidity. Knowing them helps you protect yourself.

1. Customers Pay Late (Bad Debts)

This is the classic: You deliver a service, send the invoice — and then you wait. In Switzerland, the average payment term is 30 days, but many customers pay after 45, 60, or even 90 days. In the worst case, a customer doesn't pay at all (bad debt). Meanwhile, you still have to pay your own bills on time.

2. Tax Back-Payments (Income Tax, VAT)

In the first and second year of self-employment, provisional tax bills are often based on estimates that are too low. When the final assessment arrives, a back-payment of several thousand francs may be due. The same applies to VAT: If you postpone the settlement, you risk a high back-payment plus late-payment interest.

3. AHV Instalments Set Too Low

The compensation office sets AHV instalment contributions based on your reported income. Many self-employed people report too low an income at the start to keep quarterly bills down. The reckoning comes after the tax assessment: the compensation office demands the difference — often CHF 3,000 to CHF 8,000 in one lump sum.

4. Seasonal Fluctuations

Freelancers, consultants, and many service providers know the problem: In certain months (e.g. July/August, December), revenues are significantly lower than the rest of the year. If you spend everything during strong months, you lack the cushion during the slow period.

5. Excessive Private Withdrawals

As a sole proprietor, there is no fixed salary — you withdraw money as needed. The temptation is great to withdraw more than is sustainable during good months. When a tax bill, AHV back-payment, or bad debt hits, the money is gone. Our article on calculating your profit shows you how to determine your actual profit.

Rule of Thumb for Private WithdrawalsNever withdraw more than 60–70% of your monthly profit. You need the rest for taxes, AHV, VAT provisions, and unforeseen expenses.

03Liquidity Planning in 5 Steps

A liquidity plan doesn't have to be complicated. These 5 steps give you a solid foundation:

Step 1: List All Fixed Costs

Create a complete list of your monthly fixed costs. These are all expenses that occur regardless of your revenue:

Rent (office or home-office share)
Insurance (daily sickness benefits, professional liability, property insurance)
Software subscriptions (accounting, cloud, tools)
AHV/IV/EO instalment contributions (quarterly, but factor in monthly)
BVG contributions (if voluntarily insured)
Phone and internet
Leasing rates or loan repayments

Step 2: Estimate Variable Costs

Variable costs fluctuate depending on order volume. Estimate them based on recent months:

Material and goods costs
Travel and transport costs
Marketing and advertising
Third-party services (subcontractors, freelancers)
Postage, printing, office supplies

Step 3: Plan Income Realistically

This is where the biggest errors occur. Plan your income not as a best-case scenario, but realistically to conservatively. Consider:

Actual payment receipts (not invoice date, but when the money arrives)
Seasonal fluctuations (factor in weaker months)
Probability of payment defaults (1–3% flat deduction)
Ongoing contracts vs. one-off projects

Step 4: Build Reserves

This is the most important step. Build earmarked reserves for foreseeable expenses:

Taxes: Set aside 20–25% of your profit in a separate account
VAT: The collected VAT doesn't belong to you — separate it immediately
AHV back-payment: Calculate the effective contribution rate and set aside the difference from your instalment payments
Emergency reserve: At least 2–3 months of expenses as a buffer

Step 5: Monthly Planned vs. Actual Comparison

A plan only works if you regularly compare it with reality. Every month: Compare planned income and expenses with the actual figures. Adjust the plan if something changes. This way, you spot liquidity crunches weeks in advance — not when your account is already empty.

einzly helps you with thisWith einzly, you always have a clear view of your income and expenses — the best foundation for your liquidity planning.

04Tips for Better Liquidity

Beyond planning, there are concrete measures to actively improve your liquidity:

Set shorter payment terms: Instead of 30-day payment terms, set 14 days. This is perfectly normal in Switzerland and shortens the time until the money arrives in your account
Partial invoices for large projects: Agree on milestone payments. For example: 30% upon order, 40% at interim delivery, 30% upon completion. This way, you don't pre-finance the project alone
Enforce dunning consistently: Send the first reminder immediately after the payment deadline expires. Don't wait weeks. In Switzerland, you can charge late-payment interest of 5% from the second reminder (CO Art. 104)
Offer cash discounts: Offer a 2% discount for payment within 10 days. This motivates customers to pay quickly and costs you less than a liquidity crunch
Invoice immediately: Send the invoice on the day the service is delivered — not at the end of the month. Every day of delay is one less day of liquidity
Cost review: Quarterly review all ongoing costs. Cancel subscriptions you don't need. Negotiate better terms with suppliers

05Example: 6-Month Liquidity Plan

Here's what a simple liquidity plan might look like for a freelancer (graphic designer, sole proprietorship):

Position	Jan	Feb	Mar	Apr	May	Jun
Opening balance	12,000	8,200	6,900	5,100	9,300	11,800
Income	6,500	7,000	8,500	12,500	10,000	9,000
Fixed costs	−3,800	−3,800	−3,800	−3,800	−3,800	−3,800
Variable costs	−1,500	−800	−1,200	−500	−700	−1,000
Tax reserve	−1,300	−1,400	−1,700	−2,500	−2,000	−1,800
AHV instalment	−1,200	−1,200	−1,200	−1,200	−1,200	−1,200
Private withdrawal	−2,500	−1,100	−2,400	−300	0	−1,500
Closing balance	8,200	6,900	5,100	9,300	11,800	11,500

The example shows: Even with fluctuating income, the freelancer stays solvent because she adjusts private withdrawals to her liquidity. In February and April, she withdraws less to avoid jeopardising her balance.

06Frequently Asked Questions About Liquidity Planning

As a rule of thumb, you should have at least 2–3 months of expenses (including private withdrawals) as a reserve. If your business is highly seasonal or you have few major clients, 4–6 months of expenses is more appropriate. In Switzerland, tax and AHV provisions come on top of this and should be kept separately.

Immediate measures: Actively chase outstanding invoices (call, don't just send reminders), extend payment terms with suppliers, postpone non-urgent expenses. Medium-term: Set up an overdraft facility with your bank (before the crunch!), issue partial invoices for ongoing projects. Long-term: Introduce liquidity planning so it doesn't get to this point again.

At least monthly. Ideally, do a brief planned vs. actual comparison at the end of each month: Did income arrive as planned? Were there unexpected expenses? What do the next 3 months look like? This takes 15–30 minutes and can save you thousands of francs in dunning fees, late-payment interest, or credit costs.

No, it's not legally required — but strongly recommended. The Swiss Code of Obligations (CO) only requires sole proprietorships with less than CHF 500,000 in annual revenue to keep simple bookkeeping (income and expense accounting). A liquidity plan isn't mandatory, but it's the most important tool for safeguarding your solvency and reacting early to cash flow issues.