Cash flow forecast
Cash forecast · Payment forecast
A cash flow forecast estimates the timing and amount of cash inflows and outflows over a period, using payment terms, commitments, receipts, payroll and other obligations.
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Simply put
What it means in ordinary work
It predicts when money will leave and arrive. A procurement commitment can affect cash even before the invoice is issued.
Why it matters
Accurate forecasting helps the organisation plan liquidity and avoid surprises. Procurement data on orders, receipts and payment terms is an important input.
A hypothetical in practice
A hypothetical finance team combines approved purchase orders, expected receipts, supplier payment terms and known invoices into a weekly 13-week cash forecast, then reviews large variances.
Common pitfalls
Using invoice date instead of expected payment date can misstate cash. Include processing and approval time.
Long supplier terms can hide liquidity stress that appears when payment falls due.
Regional lens
How this lands where you work
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