Discussions between Thiago and the Reds are well advanced and transfer fees are now the only sticking point.
Bayern wants 35 million euros (£ 31.5 million) for the former Barcelona based on SPORT.
Liverpool, however, does not want to pay the transfer costs of the 29-year-old in one go and prefers to spread the payments.
The Reds have excelled at recruiting in recent years, but the impact of the coronavirus is likely to have an effect on transfers this summer.
Thiago was a regular at the Bavarians this quarter and once again won the Bundesliga title.
But he’s only had two starts since returning from football due to a groin problem.
If Thiago moves to Liverpool, he would face Fabinho, Jordan Henderson and Alex Oxlade-Chamberlain for a starting spot.
But Jurgen Klopp has already said that the club “cannot spend millions” and will continue to give talent to the academy.
“This is not a team that you should change now and say” OK, we need this position and this position “,” said the German this week.
“If you’re a football fan, you want a backup for him and him, even if you’re completely happy with everyone, you want backups.
“We don’t have a first XI, I say we have a first 16 or 17, they can all play at the same level. But we have to use it 100%.
“And what we want to create are our internal transfers. We can’t spend millions and millions and millions because we want to or we think it’s nice to do it. We never wanted that. ”
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“We want to strengthen this team and this team is strong. The problem with a strong team is how to improve a strong team in the transfer market?
“It works with money, of course, it is possible. But it never works except with money. You have to be creative and we try to be creative. We are trying to find solutions internally.
“And there is still much to come. We have three or four players who can take very big steps. All players can take steps and that’s the pressure that we do too, internally. “