What is the difference between a direct cash flow forecast and an indirect cash flow statement?

A direct forecast starts with expected cash receipts and cash payments, then calculates the resulting cash balance by week. An indirect cash flow statement starts with net income and adjusts for non-cash items and balance-sheet changes. The direct approach is used for forward-looking liquidity management, while the indirect approach is generally prepared as part of periodic financial reporting.

How do you update a 13-week cash flow forecast each week?

Replace the completed week's forecast with actual cash results, then compare forecast and actual figures by material line item. Explain significant variances, revise timing assumptions, shift the remaining weeks forward and add a new thirteenth week. This preserves a rolling quarterly view.

What line items should be in a 13-week cash flow forecast?

The core lines are beginning cash, customer collections and other receipts, operating payments, financing or other payments, net cash movement and ending cash. Common disbursements include supplier payments, payroll, rent, insurance, taxes, capital expenditure, loan payments, interest and fees. A company may separately show available revolving-credit capacity where applicable.

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Deals

Start here Net working capital: formula, calculator and example Operating cash flow formula: a worked example Corporate treasury functions: cash, funding, payments and risk What is a natural hedge?

Deals

Net working capital: formula, calculator and example

Operating cash flow formula: a worked example

Corporate treasury functions: cash, funding, payments and risk

What is a natural hedge?

Unlevered free cash flow: formula and worked example

Intercompany netting: how it works, with an example

Cash flow forecasting methods: examples and a variance worksheet

What is reverse factoring?

What does a corporate treasurer do?

What is liquidity management? Cash planning and funding needs

What is a revolving credit facility?

13-week cash flow forecast: build your plan and download it