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AJ-13Short-Term Cash Flow Forecasting
Kristen Kern, MacKay Sposito
Cash Flow Forecast – Short Term
• Kristen [email protected]
360-356-1579
• Kristen Kern - Controller
Short Term Cash ForecastAR Section of Cash Flow Forecast Report
• Weekly Cash Received Projection:Based on each Invoice date + client average days to pay
• Beyond the Current Month Cash Projection:Only as good as invoice final completions
• Overdue:Invoice date + client average days to pay exceed todays date
• Outstanding:AR & WIP total SHOULD ALWAYS tie to your AR & WIP Aging’s
WIP and Cash Receipt ForecastWeekly Short Term Forecast
WIP Section of Cash Flow Forecast
• Average days to Bill
• Average days to Pay
• WIP - # of Days to Convert
• WIP – Discount %
Step 1 – Run the Cash Flow Forecast Report
Enter:** No. of Days to Convert ** WIP Discount
Expand WIP Forecast Section - “Use Drilldown”
** Days to Bill –Global - average days to Bill
** Days to Convert –Informed by user running report
** Days to Pay –Client specific - based on historical average days to pay
Short Term Cash Flow – A/R exhibit
Expand
Short Term Cash Flow Daily Calc - exhibit
Accounts Payable – might have “wiggle room” on payment schedule based on weekly cash balance
Accounts Payable - Short Term ForecastAP Forecast –Sections:
1) 1st of Month = Rent/Health Insurance2) Recurring Monthly Expenses
• Average/Estimate by Vendor Due Date
3) Employee Reimbursements4) Sub-consultants
• Identify Job/Client Sub associated with• Client Inv – how many days to pay – Change due date
on SubConsultant Invoice to reflect Clients # of Average days to pay
• Pay when Paid Report w/accurate Due Date
5) Known Misc – Distributions, lump sum pymts
Deposit Tracking - Bank to Ajera Forecast
Ajera – Cash Forecast in Widget Gallery
Beware of:
** Totals in Report not tying to Agings (WIP, AR, AP)** Sum of buckets NOT tying to Outstanding Totals (Widget AR Buckets = $1,803,717.77; Total = $1,777,581.96; diff = $26K)
** WIP, by definition, won’t collect cash until invoiced – Widget reflects WIP receiving WIP immediately??** Forecasts only as good as Invoices/Time in system – AR provides a 4-6 wk opportunity for a look forward based on Client Billings – (Difficult with WIP & AP to see too much into the future – Time/Expenses constantly being informed….)
** Weeks in Widget – starts on a Sunday, end on a Saturday – not always a “true” month
Cash Flow Forecasting…Hint – Use the system data/tools available to you!
1) A/R – Client Invoice Date + Days to pay2) A/P – Recurring + Expense Reimbursements3) Sub Consultants – Client Days to Pay becomes
Sub Invoice Due Date = Pay when paid rpt tool4) Payroll – Estimate Cash outflows + 401K/Tax
funding
Questions?Your 2 Best Friends as an Accountant:
Predictable Timing & Money