How cash flow forecasting is carried out: basic information

Новости экономики

27.04.24

Cash flow forecasting is an essential component of financial planning for any company. This process provides the organization with insights regarding expected receipts and expenditures over a certain period of time.

The results of the cash flow forecast can be a valuable guide for making informed decisions and ensuring the financial stability of the enterprise.

What is it?

Cash Flow Forecasting is a process that allows a company to analyze and evaluate expected cash receipts and expenses in the future. This includes forecasting all sources of income for the company, such as sales of goods or services, investment income, etc., as well as forecasting all expenses such as salaries, rent, taxes and other operating expenses.

Why is it needed?

Predicting future cash flows allows a company to plan the use of its financial resources more efficiently. This helps to avoid a shortage of funds or excessive liquidity. Knowing what income and expenses are expected in the future, the company's management can make informed decisions regarding investments, loans, business expansion and other strategic steps. Cash flow forecasting helps the company prepare for possible changes in its financial position and develop action plans to minimize risks.

Using the Arima method, an autoregressive integrated moving average, Finoko software allows you to analyze and predict time series of company cash flow data with high accuracy. This method takes into account both the latest data and historical trends, which allows you to get more reliable forecasts for the future.