Rolling cash flow forecast – see liquidity week by week
The rolling cash flow forecast of Revise EPM compiles upcoming cash inflows and cash outflows on a weekly basis and shows how the company's cash reserves and available liquidity develop. The forecast can also consider available financing as well as the impacts of project payment installments and advance payments on future cash flow.
Monthly level can mask a critical week
The total cash flow for the month may look good, even if the company's funds are insufficient for all weeks of the month.
For example, a large customer payment may come in the last week of the month, even though salaries, taxes, and suppliers need to be paid earlier.
Weekly level forecasting brings timing into view.
The bank account balance does not reflect the full liquidity
The focus remains constantly on upcoming weeks
The cash flow forecast is done on a rolling basis.
This way, the company has a continuously up-to-date view of future liquidity.
The realization updates the starting situation and the forecast continues forward.
What does the cash flow for the upcoming weeks consist of?
TO CASH
✔ financing
FROM CASH
✔ investments
WEEKLY NET CASH FLOW
ENDING CASH
✔ Available financing
AVAILABLE LIQUIDITY
Advance payment helps at the start of the project – but money is needed later
An advance payment received from a customer can significantly improve the cash situation at the beginning of the project.
At the same time, the company incurs an obligation to complete the project, for which materials, labor, subcontracting, and other costs will be paid later.
If the advance payment is used for other activities and the remaining cash needs of the project are not considered, a good cash situation can quickly turn into a financing need at the end of the project.
Payment terms are also about managing cash flow.
The profitability of the project can be the same with two different payment schedules, but the financing need of the project can be completely different.
Well-planned payment installments can reduce the company's need to finance the customer's project from its own cash.
See cash shortfall before the money runs out
Simply showing the upcoming cash shortfall is not enough. Management needs to see, when its own cash buffer starts to diminish, when the credit limit needs to be used, and when the overall liquidity is also at risk of running out. This is the key management benefit of cash flow forecasting.
NORMAL CASH FLOW CURVE
Own cash is sufficient
NOTICE
Cash buffer falls below target level
WARNING
Credit limit is needed
CRITICAL
Available total liquidity is at risk of running out
ACTIONS ARE NEEDED
The balance sheet and cash flow show the same future from different perspectives
From operational data to future cash flow
Know in advance if the funds are sufficient
Rolling cash flow forecast helps to see the cash inflows, cash outflows, and available liquidity for the upcoming weeks. When changes are seen early enough, the company has more time to influence the timing of payments, working capital, and financing.