Budget Cash Flow Assumptions
Cash flow assumptions are integral to budgets and cash flow forecasts. Many budget amounts impact upon the bank account. Revenue from sales must be collected over time and expenses are often paid one or more months in arrears. In Visual Cash Focus these assumptions are known as profiles.
Future cash flows are calculated by reviewing when cash is collected or disbursed (inputs and outputs). Amounts can be accrued until cash is received or paid. An account’s cash flow profile describes these timing schedules based on the cash flow assumption as well as the accounts associated with the cash flow.
With Visual Cash Focus an account can have a different cash flow profile for every period in the budget.
This ability to assign a “cash flow profile” per period is very handy when catering for seasonality, changing trade terms, sales etc. Enabling account cash flow assumptions to vary by budget period for the duration of the rolling forecast should facilitate greater accuracy between actuals and forecast over time.
In profiles revenues and expenses can be linked to specific balance sheet accounts, e.g. revenue can be linked to accounts receivable and bank accounts or inter-company accounts.
E.g. in the cash profile above 100% of the cash goes to the designated bank account. However if you wanted the proceeds to go to more than one bank account just set the cash profile up accordingly