Oct 15 2012
Do you have the right amount of cash, at the right time in the right place to meet your (cash) obligations? Cash flow forecasting is a company issue not just a treasury or accounting function.
There’s a simple exercise you can do that will help you see your whole cash picture. Write down what cash you have on hand today. Then, add what cash is incoming to fund upcoming expenses – and when. Put each event for each dollar on a waterfall chart and create the steps down to the “basement”. Do this for each cash outlay planned in the next 13 weeks. Do the same for the revenue that is coming in by reversing the process. Show the dollars and the balance growth, by date, as you step up to the “roof”.
Are you above or below where you started? Are you where you want to be? Start here with your team and financial advisors and manage to where you want the dollars in the steps to be and in the timeline you need!
Individual and business unit goals and objectives need to be tied to the company P&L. The goal of a cash forecast is to meet those company’s financial objectives. Big or small, everyone at your company that affects cash needs to know how their decisions and actions affect the company’s financial plans.
“Cash is King” is an old saying that is relevant today and should be your focus every day. Seek out those tools and services your partners provide to help you manage your cash flow.
This is the third in this series of updates on cash flow. I would very much like to hear what other ideas, concerns and question you have regarding cash flow forecasting.