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3 Way Forecasting for Business Cash-flow Optimisation
We face one of the biggest challenges to business since the Second World War. We all expect that the extreme disruption we’re all dealing with could last for six months or even more.
One of the keys to managing your business through this period is how well you plan your strategies for doing so.
Three-way forecasting helps a business to understand its future cash position for effective strategic planning.
Robin is a Chief Financial Officer with Virtual CFO Group Australia. He was CFO for Leader Newspapers, a subsidiary of News Corporation, and has worked with SME clients, including trades and services, manufacturing, wholesale and professional services, for the past 9 years. Virtual CFO Group Australia is at the forefront of this emerging industry in Australia and Robin is a founding member of the Association of Virtual CFOs. Services provided include forecasting and planning, financial systems development, performance reporting, finance and capital management, advice on business investments, financial analytics, finance training and bookkeeping.
Scenario planning the strategy options for businesses negotiating this crisis should include three-way forecasting. This helps a business to understand its future cash position and requires a quality planning process.
What is three-way forecasting and how is it performed?
- The profit & loss forecast determines expected cash flows from operational activities
- The balance sheet forecast determines expected cash flows based on the balance sheet movements of the business
- The cashflow forecast is determined from the profit & loss and balance sheet forecasts.
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