This checklist is designed to guide the finance team in preparing a cash flow forecast to ensure that the organization maintains sufficient liquidity for its operations. It outlines the necessary steps to gather data, analyze trends, and project future cash flows accurately.
Collect historical cash flow data for the past 12 months, including operational cash inflows and outflows.
Determine key drivers of cash flow, such as sales forecasts, payment terms, and seasonal trends that influence inflows and outflows.
Based on historical data and identified drivers, estimate future cash inflows for the next 12 months.
Estimate future cash outflows, including fixed and variable costs, capital expenditures, and any expected one-time expenses.
Compile the projected inflows and outflows into a cash flow forecast, detailing monthly cash position.
Review the cash flow forecast with the finance team, making adjustments based on feedback and new information.
Continuously monitor actual cash flow against the forecast and update the forecast monthly to reflect new data.
Prepare a report summarizing the cash flow forecast, significant findings, and any recommended actions to enhance cash flow management.