TR E A S U RY MANAG EM ENT
Have trouble forecasting
due to seasonal business
fluctuations? Check out
our ONLINE EXCLUSIVE
at connect.snb.com/
forecasting.
CASH FLOW FORECASTING
The Future Is More
Predictable Than You Think
Business is great. Profits are up. Your customer base is growing.
What could go wrong? Plenty. Learn how cash flow forecasting
bridges dangerous gaps in your company’s financial picture,
empowering you to calculate future needs and manage risk.
TIMING IS CRITICAL in business, and unforeseen shortfalls in your cash
position can be detrimental to operations and morale. Cash flow forecasting,
driven by historical accounting data and your own understanding of the
rhythm of your business, could be the key to helping you see around corners
months in advance.
Tools of the Forecaster’s Trade
Cash flow forecasting involves a multitude of data derived from sales,
payroll, receivables, inventory, and payables. Given the myriad variables
and components, the process can overwhelm even those who are familiar
with the process. Fortunately, there are resources to help you tackle the job:
> ONLINE TEMPLATES. Web-based templates, though somewhat limited,
are widely available and will guide you through the manual process of
entering your data in the simplest of terms.
Examples: score.org, SBA.gov, Google Docs
> SOFTWARE ADD-ONS. Cash flow modules available with your accounting
software package are more automated, allowing you seamlessly apply
historical financial data to sales, receivables, and payables.
Examples: QuickBooks, Xero, FreeAgent
> CUSTOMIZABLE SYSTEMS . These personalized programs will import
your unique financial data from the company’s existing accounting system
to generate robust forecasts and will permit you to toggle parameters to
explore different what-if scenarios. Some forecasts are sharable online,
allowing multiple users to collaborate in real-time.
Examples: Float, Dryrun, Pulse
MAXIMIZE YOUR
FORECASTING ACCURACY
Enhance the reliability of your cash
flow projections by following these
simple guidelines:
TIMING. Apply two years of historical
data to your forecasts and project
only 12 months in the future.
VARIABLES. Look beyond fixed
costs to include fluctuating
expenses (i.e., quarterly taxes,
insurance premiums, seasonal
inventories and sales variations,
months with three payrolls).
ASSUMPTIONS. Make educated
assumptions based on knowledge
of your business. For example, use
an average number of days your
customers pay invoices to deter-
mine influx of cash and remember
that cash flow depends on paid
sales, not just contracted sales.
COMPARISONS. Maintain an itera-
tive, rolling 12-month projection to
continuously identify variances in
data. Learn from your mistakes and
calibrate assumptions for future
projections.
Whether you’re bracing for a
shortfall or planning for a surplus,
Sterling National Bank can assist
you in finding the right solutions and
approach. Contact your Relationship
Manager today at (855) 876-8940.
Cash flow shortfalls are cited
in 80% of all businesses that fail.
RANKED ONE OF FORBES' BEST BANKS OF 2018 // CONNECT INNOVATION FALL 2018 // SNB.COM
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