What energy companies need to know about liquidity management right now

Financing the energy transition requires substantial investment. At the same time, cash flows are becoming more volatile and financing costs are set to rise. Financial leeway is often limited, as the requirements imposed by investors and local authorities restrict flexibility in terms of both equity and debt. Against this backdrop, internal financing is becoming increasingly important. It is increasingly becoming a key prerequisite for financial manoeuvrability and the ability to invest. 

What does this mean for liquidity management in practice? Our experts explain what matters most for companies when it comes to optimising control processes, holistic monitoring and new financing models.

You can find a concise overview of how cash-based settlement management makes it possible to plan liquidity in our product sheet “Securing liquidity. Increasing investment capacity”:

Liquidität sichern. Investitionsfähigkeit erhöhen.

Cash-orientierte Abrechnungssteuerung macht Liquidität planbar und stärkt die Finanzierungskraft.

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Guidance for energy suppliers and network operators

In the energy and infrastructure sectors, the quality of cash flows is increasingly the determining factor in a company’s ability to invest and secure financing. However, high levels of capital tied up, revenue structures shaped by regulation and long-term investment cycles mean that liquidity cannot be adjusted at short notice.

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These three factors are particularly detrimental to the flexible availability of liquid funds:

A lack of transparency regarding receivables makes it difficult to manage working capital effectively.
Fluctuating cash inflows further restrict the scope for borrowing.
Limited forecasting accuracy drives up financing costs significantly.

A systematic, data-driven approach to liquidity management helps CFOs to keep track of these three factors and actively influence them. This reduces uncertainty in planning, increases the stability of cash flows and measurably improves the company’s position vis-à-vis lenders. Against a backdrop of growing investment and more restrictive financing conditions, liquidity management is thus becoming a crucial lever for financial flexibility.

Three initial steps for liquidity management

We recommend that CFOs and treasury managers adopt a structured approach across three key areas – deliberately working within existing systems and processes, without the need for complex transformations.

Making receivables transparent

The starting point is a concise potential analysis of the meter-to-cash processes: invoicing logic, advance payment models and receivables structures are analysed and organised according to key value drivers (throughput times, frequency, completeness, accuracy).
Managing incoming payments in a planned and controlled manner

Historical payment patterns, instalment structures and dunning processes are consolidated into a factor that can be actively managed. The aim is to produce a reliable forecast of cash inflows and, consequently, to achieve more stable internal financing.
Improving the quality of forecasts through robust KPIs

A structured, verifiable set of KPIs, together with a practical approach to reporting and governance, ensures that liquidity can be managed effectively in the long term and lays the groundwork for discussions with investors.

Liquidity management as a lever for financing and investment capacity

For companies, this means that, alongside financial performance, effective liquidity management and transparent, predictable and resilient cash flows are becoming increasingly important. From a CFO’s perspective, manageable liquidity has a direct impact on five dimensions of financial capacity: predictability, transparency, terms, flexibility and room for manoeuvre. It is precisely in the successful implementation of these dimensions that the difference lies between liquidity managed for operational purposes and liquidity that can be utilised strategically.

Further perspectives: New funding models for the energy sector

Manageable liquidity and robust KPI structures are essential for tapping into new sources of funding. Digitally verifiable and standardised data environments can help organise valuation and audit processes more efficiently. They also reduce scope for interpretation and can facilitate access to capital market-oriented financing models – particularly in sectors with high capital intensity, such as the energy and infrastructure sectors.

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