What is the best software for cashflow forecast

Cashflow forecast

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What is the best software for cashflow forecast (with profit and loss, and balance sheet)


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By paul.benny
13th Feb 2024 13:11

It's not necessarily "what's the best software?". It's whether those preparing the forecast actually understand the business and the drivers of cashflow. Every business I've every worked with has its own peculiarities that affect cashflow, whether seasonality, lumpiness, dominant customers or suppliers.

Yes, I'm sure some software can handle all of these - but allowing for all possibilities probably makes it appear over complex. Unless your business is extremely vanilla, Excel is probably best. And even then the skill of the model-builder is key, ensuring you have something that is clear and robust.

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Replying to paul.benny:
By FactChecker
13th Feb 2024 15:58

100% ... and not just "the skill of the model-builder".
The time spent in initial analysis of historical figures - such as from aged debtors - is paramount.
Can you identify 'typical' times taken to pay? And do these values fall into groups (whether specific clients or sectors, or size of orders, or time of year, etc)?

The most effective cashflow forecaster I ever built was for my own company - and it used deceptively simple-looking weightings for our grouped factors to forecast cash collection (with automatic roll forward). It also generated 3 sets of 'results' (based on 'worst', 'typical' and 'best' case scenarios) for a rolling 12-month outlook ... and (via a linked worksheet) provided a variance comparison between last month's projection for this month and this month's actual - highlighting oddities and potential needs for tuning the model.

It was not only simple to operate, but remarkably accurate (even surprised me) ... the reason of course being the initial effort put into analysis and design.

The opposite (the quick, cheap vanilla off-the-shelf package) is not only usually delivering little of value, but can be disastrous (if the lack of understanding by the user leads them to assume that whatever it says, is therefore guaranteed to happen)!

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By mavis02455
13th Feb 2024 14:31

Thanks for the advice

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John Toon
By John Toon
13th Feb 2024 16:38


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Replying to johnt27:
By FactChecker
13th Feb 2024 17:57

Totally ... just realised that in amongst all my burbling above, I forget to mention that everything was built in Excel.

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