You’ve got a cash flow forecast for a rolling 13 week period congratulations, you’re ahead of most companies. However, you could still be subject to one major flaw with the cash flow forecast and that flaw often leads people to quit doing the forecast. Instead of it being an ongoing, effective management tool. It just becomes a passing fancy. A shot in the dark that’s only done when the thought comes or when there is a particular crisis hitting in cash.

But it doesn’t have to be that way. There are ways to streamline the process. Make it an easier process and you’ll be much more likely to keep up with it in the future and less likely to drop it when things get busy in the finance department on other matters.

Here’s one thing I have done with clients can make it an easier process. Two of the key parts of cash flow will be what money’s going to be coming in and what money will be paid out through your accounts payable.

For the money that is coming in what I do is download the accounts receivable summary aging. And based on that aging, we setup a table for the customers that show the customer name and how many days they’re expected to pay. The next step is to combine the downloaded trail balance with the expected days to pay by the customer and use that to build a cash flow forecast on the existing revenues. You then can put in future revenues, which could be linked in from a budget and that can be put in through the average days expected to pay. This additional step will capture the expected collection on future billing. Now, you have one of the key half of the equation done, what money do you expect to have come in.

The other side is accounts payable and here a very similar process is used. The accounts payable trail balance is downloaded and then it is matched against a separate table created showing the accounts payable vendors and how many days we expect to pay their bills in. This creates expected payments on the current accounts payable. Now, going forward on this side of the equation, they’ll be more work because you have different individual situations to forecast. They may not necessary run through accounts payable, such as payroll, rent and perhaps other payments. However, by having the accounts payable part taken care of that can help cover a good chunk of the equation.

So then you have it, the accounts receivable forecast and the accounts payable forecast and that can be merged in with the other revenues and the other payment expected and then you have your rolling 13 week forecast. By automating the process to project the receivables and payables and turn it more into a download rather than a laborious manual exercise every week, you’ve just taken a lot of the time out that’s required to produce the 13 week forecast and keep it updated.