Cash flow and working capital

What the work produces

We build a rolling cash view, examine receivable and payable ageing and identify working-capital levers. Forecast assumptions are distinguished from committed receipts and payments.

The agreed output can include a dated opening cash position, expected receipts and payments by period, an assumptions register, scenario comparisons and a follow-up list. The forecast horizon and level of detail are selected around the business’s planning needs and the quality of available records.

Each material assumption has a source and an owner. A customer’s expected payment date, a proposed purchase and an unconfirmed funding receipt should remain identifiable as assumptions rather than appearing indistinguishably alongside completed transactions.

Inputs to organise

• Bank balances
• debtor and creditor ageing
• payment commitments
• payroll dates
• loan schedules
• inventory plans
• sales forecasts.

Provide the date and scope of the opening balances, identify restricted or otherwise unavailable amounts, and reconcile outstanding customer and supplier items to the accounting records. Explain disputed receivables, instalment arrangements and payments already initiated but not yet reflected in the bank position.

Keep approved commitments separate from optional spending proposals. Identify the business owner who can confirm timing and the supporting contract, schedule or decision. Where source records are incomplete, record the limitation rather than giving an unsupported forecast a false appearance of precision.

What good records help you see

A large order can consume cash through stock and tax payments before the customer pays. Model the payment milestones rather than treating booked revenue as cash available.

Example: a forecast assumes collection in the same period as delivery, but the customer’s agreed payment terms place it later. Show both timings in the scenario comparison and explain which other assumptions remain unchanged. This makes the timing dependency visible without claiming that either scenario will necessarily occur.

1. Reconcile the opening position to the agreed source records.
2. Map expected receipts and payments to their supporting schedules.
3. Record assumptions and avoid counting the same receipt in both an outstanding-invoice schedule and a sales forecast.
4. Compare agreed scenarios and identify the assumptions driving the largest differences.
5. At the next update, compare actual movements with the previous forecast and document the reasons for material variances.

Agree the boundaries

The model is scenario-based and depends on management inputs. It is not a lending commitment or assurance that forecast receipts will arrive.

Confirm the covered entities, periods, systems, deliverables and fees before work starts.

Agree who supplies updates, who reviews the model and how frequently it will be refreshed. Funding negotiations, payment authorisation and decisions about collections or expenditure remain with the business unless a separate engagement expressly covers additional work.

Connect the model to management reporting and the monthly-close records. A forecast should retain its preparation date and assumptions so a later reader can understand what was known when it was issued.