A basic component of financial budgeting is the forecast of capital requirements and liquidity. Financial budgeting is crucial to save the solvency of a business. Inadequately protected solvency can lead to insolvency of the business since illiquidity or impending illiquidity count as facts, which according to the bankruptcy act compulsorily lead to a file for insolvency. In the context of financial budgeting any expected future payments are contrasted to reveal a breach of liquidity as soon as possible and arrange measures duly to protect the liquidity of the business.
