Plan your cash, don't hope for it: rolling forecasts for mid-sized companies

By August the half-year figures are in and planning for the next financial year begins. Profit is known, the bank balance certainly is. Neither tells you whether November will bring enough cash for payroll, the tax prepayment, supplier invoices and a planned investment at once. That is the gap a rolling cash flow forecast closes. Here is what it has to do, which data is already in the building, and how dream Vision delivers it in dCM.

Profit is an opinion, cash is a fact

The saying is old and still holds. In accounting terms, revenue arises the moment the invoice is issued. The money arrives later, often 14 or 30 days later, sometimes only after a second reminder. On the other side sit payments that cannot be moved: wages, social security contributions, rent, leasing instalments, VAT prepayments. Companies that pre-finance materials or run long projects carry that gap twice.

This is why a profitable company can run into payment difficulties while a business with a thin margin sits comfortably. The profit and loss statement answers whether the business is worthwhile, not whether there will be money in the account on the 28th.

Why the bank balance and the monthly report fall short

A bank balance is a snapshot; it says nothing about the direct debits due in the next ten days. The monthly accounting report arrives from the tax adviser with a few weeks' delay and looks backwards. Together they give you a picture of the past and a point in the present, but no view ahead.

Many companies fill that gap with a spreadsheet only one person really maintains. It works as long as it is kept diligently, but the moment that person goes on holiday it goes stale, and stale cash figures are worse than none because they suggest a certainty that is not there.

Two horizons, one method

Two time frames have proven themselves, answering different questions.

• 13 weeks, week by week: the operational horizon. It shows whether and when things get tight, while there is still time to act: earlier reminders, deferred orders, an agreed payment plan.
• 12 months, month by month: the strategic horizon. It answers whether an investment, a new hire or a repayment fits the picture.

The key word is rolling. Instead of being drawn up once a year and filed away, the forecast is carried forward regularly: as one week drops out, another is added at the far end. The view ahead stays the same length, and the plan never ages.

One number is not enough, scenarios are

Every forecast rests on assumptions. When will the largest customer pay? Will the order land in October or in January? Rather than committing to a single value, model three: an expected case plus an optimistic and a pessimistic variant. What matters is not the individual figure but whether the bad case still holds. That is where a traffic light should warn you, well before the overdraft is drawn.

The data is already in the building

The effort in cash flow planning rarely lies in the arithmetic but in collecting the data. In an integrated system that part disappears, because the sources are already there:

• open receivables from outgoing invoices, with due dates and reminder levels,
• incoming invoices and purchase orders as planned outflows,
• bank movements, retrieved daily through the banking connection and matched to documents automatically,
• recurring documents for everything that stays the same each month,
• budget figures per account and cost centre as a benchmark.

Receivables are a structure, not a lump sum

For a forecast it matters whether an invoice has been outstanding for three days or three months, and ageing by due date shows that at once. Combined with a rating of each customer's payment behaviour, it tells you which amounts will realistically arrive and when. A customer who has paid ten days late for years will pay ten days late this time too. That experience belongs in the plan, not in the head of the bookkeeper.

What dream Vision contributes

dream Vision is the business intelligence and liquidity cockpit in dCM. It reads operational data directly, with no export and no intermediate step:

• KPI cockpit with daily figures such as revenue, bank balance, open items and invoices, each with drill-down to the document.
• Rolling cash flow forecast over 13 weeks or 12 months, with best, expected and worst case scenarios and a liquidity traffic light that warns of a shortfall.
• Receivables ageing and payment behaviour score: open items bucketed by due date, plus a customer grade from A to D for payment risk.
• Conversion funnel from quote through order to invoice, so the forecast does not start only at the invoice.
• Budget and plan versus actual per account, cost centre and period, together with forecast accuracy tracking, which tells you how much to trust next quarter's plan.
• Reports as PDF or Excel, optionally scheduled and emailed, for instance as a Monday briefing for management.

Company groups additionally get a shareholding chart with ownership quotas, elimination of intercompany revenue and a consolidated group cockpit. That each subsidiary sees only its own figures is enforced server side and logged.

AI analysis, but strictly optional

The AI-assisted analyses in dream Vision are off by default and can be enabled individually. Where they are used, they flag anomalies, break down the cost structure and let you put open questions to your own figures. Data is pseudonymised for this, and results pass a plausibility check so that no figures appear which do not exist in the system. That is not a side note, it is what makes the whole thing explainable to a data protection officer and a works council.

Three steps to get started

• Start small: 13 weeks is enough. Anyone waiting to build the perfect annual model tends never to start.
• Fix a slot: carry the forecast forward once a week, ideally on the same day. Regularity beats depth of detail.
• Review the variances: each week, compare what was planned against what actually came in. After two months you know your own systematic errors and plan far more accurately.

Conclusion

Cash flow planning is not a question of company size but of lead time. Seeing ten weeks ahead that things will get tight leaves you options and time to talk to customers, suppliers and your bank. Noticing it ten days ahead leaves you emergency measures. The difference is rarely commercial skill, it is whether the data you already hold gets projected forward regularly. We would be happy to show you what that looks like in dream Vision.

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