Cash Forecasting: People, Process, and Technology

I think we have a great opportunity here as we have the chance to build a group that has the support of the organization sponsoring it and I am hoping that we take advantage of it including building educational events that we want to see.

We all have relevant experience to bring to the table, but we all need to know what other group members want to get out of being in this group. Myself I have a manufacturing background from a cash rich company so I want to learn from others who are more advanced in terms of cash forecasting (past basic Excel using historical data and means) and have had to pay more attention to the accuracy of weekly cash forecasting.

In terms of framing conversations, I think it makes sense to do so in terms of forecast duration, intended use, desired accuracy, and available resources in terms of people and technology.

My first questions to the group are: why did you join and what do you want to get out of being in the group?

Answers

Patrick Reid Interim CFO • March 8, 2010

I have spent my entire career in small business where cash frequently runs short. I constantly project a monthly cash flow out one year. I do this with the GAAP method using the Income Statement and Balance Sheet. When that projection shows cash tightening up, I add the thirteen week with the more direct approach of projecting receipts and disbursements. I am looking for more specific techniques, including Excel tricks and tips, that have worked for others.

Hillari Selby Internal Recruiter • March 13, 2010

I am absolutely new to cash forecasting and am solely responsible for it in a very small (3 person company) that is JUST starting with some debt and bootstrapping it. I see cash flow as my #1 most important measurement for the next year. I am starting from scratch and would LOVE to learn all the basics and important points, do's and don'ts. THANKS!

Allan Kaplan CFO • March 15, 2010

I am working as part time CFO for two small companies, both of which are running very tight on cash (lucky me). I literally track and forecast cash by week for one, and by month for the other. For the one by week, I have a separate tabs for detailed payroll and cash collections, and the main page is expenses and net balance. On a weekly basis or so, I will yellow highlight the items to be paid, then grey highlight them when paid / collected. Collapsing collections and payroll to one line each, I can get all the other expenses (from rent to office supplies) in one screen length, giving a easy view. I then have conditional highlighting on the net cash balance to highlight when the net cash runs in the red.

For the monthly, I start with P&L budget, then do a net-to-cash adjustment, allowing for things like timing on A/P and A/R, non-cash items, etc. I generally follow a cashflow format (first non-cash, then operating, then investing, then financing items).

In both cases, after a few months of experience and related corrections into the future, the forecast gets pretty complete and believable.

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Cash Forecasting: People, Process, and Technology

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