Working Capital.3.1

Cash Flow Forecasting is the process of obtaining an estimate or forecast of a companys future financial position and is a core planning component of financial management within a company. It might sound obvious but the main output or deliverable of a cash flow forecasting process is a cash flow forecast.

What is the cash flow forecast?  What is the goal of cash flow forecast?

 From the perspective of corporate finance, cash flow forecasting is modeling the future cash liquidity of a company or an organization within a specific time frame.  Cash usually refers to the total bank balance of the company, but in the forecast it is the cash balance plus the amount of short-term investments minus short-term debt.  Cash flow is a change in cash from one period to the next (difference of 2 balances).

 From the perspective of managers in small and medium-sized businesses, the forecast of cash flow is simpler, that is to see the amount of money that will be received / collected (in) to ensure that out-of-pocket payments  can be managed to avoid them in excess of revenues.  Entrepreneurs need to learn quickly that "cash is king" and, therefore, they must be good at cash flow forecasting.

 The main objective of cash forecasting is to support an organization's cash management of cash and to ensure that the organization has the cash needed to meet its obligations (payment to the home).  provide, pay staff ...) and avoid financial problems, better manage working capital.

 Cash flow forecasting is important because if a business runs out of money and cannot afford new financing, it will become insolvent.  Cash flow is the blood of all businesses - especially startups and small businesses.  Therefore, it is important to manage what happens to the cash flow to ensure the business has enough money to survive.

-A cash flow forecast is a projection of an organisations future financial position based on anticipated payments and receivables. The process of deriving a cash flow forecast is called cash flow forecasting.

-The economic order quantity (EOQ) is the order quantity that minimizes total holding and ordering costs for the year. Even if all the assumptions don’t hold exactly, the EOQ gives us a good indication of whether or not current order quantities are reasonable.

Cash flow forecasts, just in time