Portfolioβ€ΊFinance & Accountingβ€ΊCash Flow Forecasting
Topic

Cash Flow Forecasting

Build a defensible cash flow forecast for a small business. Tests financial modelling, assumption quality, and financial storytelling.

Cash flow modellingFinancial forecastingSME financeFinancial storytelling

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Topic Execution Guide

13-Week Direct Cash Flow Forecasting & Working Capital Management

Cash flow management is the lifeline of corporate and SME operations. Financial analysts demonstrate value by building 13-week direct cash flow models, optimizing working capital timing (Accounts Receivable DSO vs Accounts Payable DPO), and evaluating cash runway under revenue sensitivity scenarios.

1. 13-Week Direct Cash Flow Forecast Model

Dynamic Excel forecast model (.xlsx) projecting weekly cash inflows, payroll, vendor disbursements, and net cash balances.

2. Working Capital & Liquidity Audit Memo

Executive memo analyzing Days Sales Outstanding (DSO), inventory holding periods, and vendor payment term negotiations.

3. Cash Runway & Sensitivity Scenario Report

Sensitivity analysis detailing cash runway durations under best-case, base-case, and downside revenue contraction scenarios.

Frequently Asked Questions (Cash Flow Forecasting)

What is the difference between Direct and Indirect cash flow forecasting?

Direct cash flow forecasting tracks actual cash receipts from customers and cash payments to suppliers weekly. Indirect forecasting starts with net income and adjusts for non-cash expenses and working capital changes.

How do you calculate Days Sales Outstanding (DSO)?

DSO = (Accounts Receivable / Total Credit Sales) * Number of Days. Lower DSO indicates faster cash collection from customers.

How do you manage cash flow timing mismatches in South African SMEs?

Implement strict 30-day credit terms, offer early settlement discounts, request upfront customer deposits, and negotiate aligned payment terms with key suppliers.

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