cashflowforecasting
Cash flow forecasting is the process of estimating a company's future cash inflows and outflows over a specified period to assess liquidity and funding requirements. It projects when cash will be received and paid, helping management prevent shortfalls and optimize idle cash.
The forecast is used to plan working capital, schedule debt service, align investments, and support decisions
Forecast horizons vary by need. Short-term forecasts typically cover daily to weekly periods up to about 13
Forecasting methods include the direct method, which sums expected cash receipts and cash payments, and the
Key inputs include historical cash flows, accounts receivable and payable aging, sales and expense forecasts, payroll,
Outputs typically comprise projected cash balances, the timing of deficits or surpluses, and metrics like liquidity
Limitations and challenges include data quality, forecast uncertainty, seasonality, one-off events, and rapidly changing conditions. Best