Keep Cash Moving: A Liquidity Plan for Your Personal and Business Finances

An unexpected expense. A slower month in your business. An opportunity you don’t want to miss. Each can create a need for cash—even when your overall finances are in good shape.

Having valuable assets and having money readily available are two different things. A liquidity plan helps you decide where to keep accessible funds, how to move them, and what to use next when a larger need arises.

When coordinated with budgeting and tax planning, this approach can help you meet obligations without unnecessarily disrupting your long-term financial goals.

1. Make Your Cash Easier to Access

Your money may be spread across checking, savings, retirement, and investment accounts. While each account serves a purpose, moving funds between them may take more time than you expect.

Start by identifying which accounts you use for everyday expenses and how you would fund them when needed.

Planning opportunities include:

• Linking eligible accounts and testing transfers before an urgent need arises.

• Reviewing transfer limits, processing times, and potential fees.

• Choosing a primary account for paying bills and receiving transfers.

• Keeping personal and business funds separate, with business transfers properly documented.

For business owners, current bookkeeping and financial reporting can help you see what is available after accounting for payroll, taxes, vendor payments, and other upcoming obligations.

2. Set Aside Cash for Near-Term Needs

Some assets take time to turn into cash. Real estate may require a sale, investments may fluctuate in value, and certificates of deposit may carry early withdrawal penalties.

A dedicated cash reserve can help you cover expenses without being forced to sell an investment or interrupt a longer-term strategy.

Planning opportunities include:

• Separating everyday spending money from emergency reserves.

• Setting aside funds for known expenses, including estimated taxes and major purchases.

• Matching access to your timeline: money needed immediately should be readily available.

• Reviewing account terms, fees, and withdrawal restrictions before committing funds.

The amount you keep available should reflect your expenses, income stability, and upcoming commitments. A business with seasonal revenue may need a different reserve than a household with predictable monthly income.

3. Decide Where Additional Cash Would Come From

What happens if your immediate reserves aren’t enough? Making that decision ahead of time can reduce the pressure of choosing under difficult circumstances.

Create a clear order for accessing additional funds, considering the timing, cost, and tax impact of each option.

Planning opportunities include:

• Identifying which assets you would consider selling first.

• Reviewing potential capital gains before selling investments.

• Comparing borrowing costs with the costs of selling an asset.

• Establishing when you would replenish reserves after using them.

Selling investments can create taxable gains, so your liquidity plan should work alongside your tax plan. The most convenient source of cash may have consequences worth reviewing before you act.

4. Prepare for Emergency Access

Your plan should also address what happens if you’re unable to manage your finances yourself.

Keep a secure account inventory, financial institution contact information, and instructions for locating important documents. Make sure the appropriate person knows where to find them.

Ask your financial institutions about authorized access and account recovery procedures, including what happens if your phone is unavailable for multifactor authentication. Coordinate any necessary legal authority with your attorney.

For brokerage accounts, naming a trusted contact can help the firm respond if it cannot reach you. However, that designation alone does not authorize someone to access your money or make transactions.

Build a Plan That Keeps You Prepared

A liquidity plan does not need to be complicated. It should give you a clear picture of what is available now, what can be accessed later, and what each decision may cost.

Review it periodically and whenever your income, expenses, business needs, or family circumstances change.

At Cohn, Lopez & Associates, our accounting services, budgeting support, tax planning, and financial and retirement planning help you look at these decisions together. Our office is located in Winter Park, with in-person and virtual appointments available.

Let’s review your financial picture and help you prepare for what’s ahead.

Call 407-960-3652 or schedule an appointment.