Detailed Cash Planning Defined

Detail Cash Planning is just what is says:  a very detailed approach to planning for the cash requirements of a company, and a look at whether it can meet those requirements.   

We call it detailed because it means you literally make a list of every payment you plan to make (check by check) for the next 3 or 4 months.  You start with scheduling everything to be paid on or before its due date.  Then you look at your current cash balance, estimate when each customer will pay you (for those who owe you money), and take a stab at forecasting what you can do in new sales over the same planning horizon.  Your cash on hand at the end of each time period will be the amount brought forward from the previous time period, plus any money you receive from customers (or loans from banks, dollar bills found on the ground, et.), less any payments you make. 

So your objective is to keep cash on hand above zero.  You might have to adjust the schedule of payments to fit your cash flow estimates.  Or, due to a projected shortfall,  you might gain the insight that a pending deal is a “must have” (as opposed to a “nice to have”), and you make appropriate concessions to guarantee that it goes through in a timely fashion.  Sometimes the result of the planning is that everything looks OK for the immediate future, and you worry less, sleep better at night.  Other times, you get a sense of urgency, and make informed decisions about what to focus on.


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  1. […] Detailed Cash Planning Defined […]

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