How cash flow forecast works

Introduction

The cash flow module is designed to automate cash flow forecasting for your budgets in CostTracker. By default, the payment dates are calculated based on delivery date and payment terms, with the option to change the dates. 

The cash flow works perfectly together with your accounting system by using a cut-off date to ensure all costs in your budgets are either covered in your accounting system or in CostTracker. 

For companies using planned purchases to track a total budget (Estimate At Completion), you will have a real-time view of all outstanding payments in your budget/project after a cut-off date. For companies not using planned purchases, you will have a cash flow forecast for all open purchase orders (open commitments) and invoices after the cut-off date.

Example

You have a budget where you have committed costs of 300, consisting of:

1. one open commitment (purchase order) of 100 with delivery date 20 February and 30 days payment terms after delivery (expected payment date 22 March)
2. one supplier invoice of 100 with document date 5 February and 15 days payment terms (expected payment date 20 February)
3. one supplier invoice of 100 with document date 10 January and 15 days payment terms (expected payment date 25 January)

When creating a cash flow forecast with a cut-off date of 31 January you will:

1. See a cash flow forecast in CostTracker for (1) and (2) with 100 expected to be paid in February and 100 in March. 
2. Since (3) has a document date equal to or before the cut-off date this will be out of scope for CostTracker and you will find this invoice of 100 as part of “Aged accounts payables” in your accounting system (if it is not already paid).

By using this methodology, you can automate the update of your cash flow forecast and be certain that all cost is captured, and no overlap exists as long as all supplier invoices prior to the cut-off date are either matched with a PO or linked to the budget.