Currently working for a tech startup - I have been tasked with creating a weekly cash forecast... there are a few different tutorials online and I have been trying to adapt them so that they fit our business. Anyone out there use one in their corporate model? Any rules of the road/do's/don'ts that I should watch out for when building this out?
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Hi techfin5, no, I never sleep and so I can respond to any lonely threads (like this one) at all hours of the night. Impressive, I know ;-)
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Was put in a similar situation at my company, except monthly cash flows. I'd recommend going down a sources and uses based on your team's forecast. Make sure you align with their calculations then break it down to weekly granularity. Each different revenue or expense stream should have it's own calculation tab supporting it.
We decided not to try and forecast the changes in working capital since it was a bit too detailed and we have a complicated business model. Each month we true up actuals to be that working capital plug. Be prepared to run scenarios across all of your inputs and assumptions so keep the model flexible when building it out.
Also, check out the Money in Excel plugin, i'd be curious if you would leverage that with business accounts to get real time transaction data, might be worth exploring but not sure of the application outside of personal banking.
^^ this. Nailed it.
This is a fine method for monthly cash flow, but would be difficult to translate accurately to weekly as you're using the indirect method.
OP, in order to do short-term cash forecasting, you should be using the simplified direct method (start with opening cash balance + inflows - outflows = ending cash balance). There are multiple ways to do it.. if you already have an indirect cash flow forecast, you can combine that with a P&L and get to the direct forecast.
Google 13-week finance forecast or 13-week cash flow forecast and a ton will come up.
That's how it's usually done. Update more often if you run a company with complex cash flow mechanics.
We update ours 2x to 1x a week usually. Then do full financials once a quarter. More often on full financials without a good use-case is a waste of time.
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