Purpose
Model a company's liquidity position under bear, base, and bull scenarios to reveal the exact week cash runs short, when covenants breach, and how large the funding gap is — then rank the available liquidity levers by how fast they generate cash and how much they cost. Turns a vague "we might be tight in Q3" into a defensible, dated survival plan.
When to Use
Invoke this skill when the user asks to:
- Stress-test cash runway or model liquidity under downside scenarios
- Determine how many weeks or months of cash remain before the tank runs dry
- Forecast when a debt covenant will breach and by how much
- Quantify a funding gap and evaluate options to close it
- Build a liquidity defense plan or cash-preservation case for the board or lenders
- Pressure-test a turnaround or restructuring plan against a bear case
Inputs Required
Before starting, collect:
- Current liquidity: Cash on hand + undrawn revolver capacity, as of a stated date
- Weekly or monthly cash flows: Recent operating cash inflows/outflows (last 8–13 weeks if available)
- Fixed obligations: Debt service (P&I), lease payments, payroll cycles, tax payments, and any known lump-sum outflows with dates
- Covenant terms: Financial covenants (e.g., minimum liquidity, leverage ratio, DSCR, fixed-charge coverage), thresholds, and test dates
- Scenario drivers: What changes in bear vs. bull — revenue swing %, collection/DSO shift, margin change, customer concentration risk
- Available levers: Known options — undrawn facilities, AR factoring, asset sales, cost cuts already identifiable, equity access, vendor terms
- Time horizon: 13-week (default) and/or 6-month view
If weekly cash flow detail is unavailable, build monthly and note the reduced precision; if covenant terms are missing, model liquidity runway only and flag covenants as unassessed.
Instructions
Step 1: Establish the Starting Position and Base Case
- State starting liquidity = cash + undrawn committed facilities, dated.
- Build the base case cash flow bridge: opening liquidity → operating inflows → operating outflows → fixed obligations (debt service, leases, payroll, tax) → closing liquidity, period by period.
- Use the 13-week view for near-term precision and the 6-month monthly view for the covenant horizon.
- Distinguish committed liquidity (drawable today) from theoretical liquidity — only count facilities without a borrowing-base or MAC constraint that could block a draw.
Step 2: Define the Three Scenarios
Set explicit, quantified drivers for each — never label a scenario without stating what changes.
- Bear (survival case): Model realistic stress, not catastrophe. Typical drivers: revenue down 15–30%, DSO extends 10–20 days, one major customer delays or churns, margin compression from discounting. This is the case the plan must survive.
- Base (management case): Current trajectory with no heroic assumptions. This is what's most likely if nothing dramatic changes.
- Bull (recovery case): Achievable upside — collections normalize, revenue recovers, a pipeline deal lands. Used to show the range, not to plan around.
For each scenario, apply the drivers to inflows and outflows and re-run the liquidity bridge.
Step 3: Calculate Minimum Cash Runway
For each scenario:
- Identify the trough week/month — the lowest closing liquidity point across the horizon.
- Report the date liquidity hits zero (or the minimum operating cash floor, if the company must maintain a working minimum).
- Report weeks/months of runway from today to that trough.
- Flag the specific outflow(s) that drive the trough (e.g., "quarterly debt service in Week 9 combined with the payroll cycle").
Step 4: Project Covenant Breach Triggers
For each covenant, in each scenario:
- Calculate the covenant metric at each test date under the scenario's projected financials.
- Identify the first test date the covenant breaches and the breach magnitude (e.g., "DSCR projected at 1.05x vs. 1.20x required — a 0.15x shortfall").
- Note where a covenant breaches before cash runs out — often the binding constraint is the covenant, not the cash.
- Flag cross-default risk: whether one breach triggers others.
Step 5: Quantify the Funding Gap
For the bear and base cases:
- Peak funding need = the maximum cumulative liquidity shortfall below the minimum cash floor across the horizon.
- State the gap as a dollar figure and the week/month it peaks.
- Separate the operating gap (from cash burn) from the covenant gap (cash or waiver needed to cure a covenant), since they may require different remedies.
Step 6: Rank Liquidity Levers
Assess each available lever on three axes and present as a ranked table:
- Speed to cash: Days/weeks until cash actually lands (immediate <2 wks / short 2–8 wks / slow >8 wks)
- Cash quantum: Dollar amount the lever realistically produces
- Cost/dilution: Interest, fees, equity dilution, operational damage, or strategic cost
Standard lever categories to evaluate, fastest-first:
- Working capital: Accelerate AR (collections push, factoring), stretch AP within terms, reduce inventory
- Facility drawdowns: Undrawn revolver, delayed-draw term loan, subject to borrowing base
- Cost actions: Discretionary spend freeze, hiring freeze, deferred capex, headcount reduction
- Asset monetization: Sale-leaseback, non-core asset sale, receivables sale
- Capital raise: New debt, equity injection, sponsor support
- Lender engagement: Covenant waiver/amendment, debt service deferral, standstill
Rank by speed-adjusted impact: prioritize levers that close the gap before the trough week, not after.
Step 7: Build the Liquidity Defense Plan
- State the binding constraint: cash runway or covenant breach, and its date.
- Sequence the levers that close the bear-case gap in time, showing cumulative cash impact against the trough.
- Identify the single most important action to take this week.
- Define the trigger points that should escalate the response (e.g., "if collections fall below X by Week 4, initiate lender conversation immediately").
Output Format
- Structure: Executive summary of survival conclusion → scenario assumptions table → three-scenario runway results → covenant breach table → funding gap quantification → ranked lever table → sequenced defense plan
- Length: 900–1,300 words plus tables
- Format: Structured document with tables for scenarios, covenants, and levers; prose for the summary and defense plan
- Sections: Bottom-Line Conclusion → Starting Position → Scenario Assumptions → Minimum Cash Runway (by scenario) → Covenant Breach Analysis → Funding Gap → Ranked Liquidity Levers → Liquidity Defense Plan → This-Week Priority
- Tone: Treasury/turnaround advisor — direct, numbers-first, no hedging on the survival conclusion
Quality Checklist
Before delivering output, verify:
- [ ] All three scenarios have explicit quantified drivers — no unlabeled "downside"
- [ ] Minimum cash runway is reported as a specific week/month and date for each scenario
- [ ] Covenant breach analysis states the first breach date and shortfall magnitude, or explicitly notes covenants were not assessed
- [ ] The funding gap is a specific dollar figure with the week it peaks
- [ ] Every lever is ranked on speed, quantum, and cost/dilution — not listed generically
- [ ] The defense plan sequences levers that close the bear-case gap before the trough week
- [ ] The binding constraint (cash vs. covenant) is named explicitly
Notes
- The most common fatal error is assuming full revolver availability — always check for borrowing-base or material-adverse-change conditions that can block a draw exactly when cash is needed.
- Covenants frequently breach weeks before cash runs out; when they do, the covenant is the binding constraint and lender engagement moves to the top of the plan.
- Bear case should be survivable-but-painful realistic — a doomsday scenario no one believes gets ignored by the board and wastes the exercise.
- Speed beats size when the trough is near: a smaller lever landing this week can matter more than a larger one landing after cash hits zero.
- If the exercise reveals no combination of levers closes the bear-case gap in time, say so plainly — that finding is the most valuable output, and it changes the conversation to restructuring or capital raise before options narrow.
How to use this skill
This file is a Claude Code skill in Anthropic's standard format — markdown with YAML frontmatter at the top.
Installing in Claude Code:
~/.claude/skills/<folder-name>/SKILL.md— auto-loads in every session anywhere on your machine (recommended for skills you'll use across multiple projects)<your-project>/.claude/skills/<folder-name>/SKILL.md— auto-loads only when working in that project (recommended for project-specific skills)
Restart Claude Code or open a new session to register.
Using in Claude.ai, ChatGPT, Gemini, or other AI tools:
- Drag this file into a new chat, or copy and paste its contents
- Send your task or request as your next message — the AI will apply the skill where it fits
For Claude Code skill details: https://docs.anthropic.com/en/docs/claude-code/skills