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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.
The Virtual CFO Group Australia helps its clients to plan their way to be more successful in the post-coronavirus environment. A key component of this is the three-way forecasts used for all its key clients. This process is an ongoing “review-plan-act-review” process that supports quality proactive management systems within the businesses.
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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