cashflowprognoses

Cashflowprognoses, often referred to as cash flow forecasts, are forward-looking estimates of a company's expected cash inflows and outflows over a defined period. They are used to assess liquidity, plan for financing needs, and manage short-term solvency. Forecast horizons vary from days or weeks for operational purposes to months or years for strategic planning. The term is frequently used in German-speaking contexts as well as in international financial practice.

Typical inputs include projected sales, timing of receivables, expected collections, purchases, supplier payments, payroll, taxes, debt service, capital expenditures, and financing activities. Forecasts can be built using a direct receipts-and-disbursements approach or a simplified net cash flow method, and are often produced as rolling forecasts that are updated regularly with actual results.

Outputs commonly include projected ending cash balances, lists of potential liquidity gaps, and suggested financing actions such as drawdowns, repayments, or working capital adjustments. They support decisions on credit terms, inventory levels, hiring, capital investments, and debt arrangements, and are frequently shared with management, lenders, and investors.

Limitations arise from uncertain assumptions, such as customer payment behavior or market conditions. To increase reliability, organizations perform scenario analysis (base, optimistic, pessimistic), perform sensitivity testing on key drivers, and align cashflowprognoses with budgeting processes. Accuracy improves with timely data, integration with accounting and ERP systems, and regular review cycles.