We will establish a plan which projects revenues and expenses, cash receipts and disbursements, and will generate periodic balance sheets. The critical part of cash flow forecasting is dependent upon whether the information compiled is complete and if the projections are realistic. (For example: Based on your current work, how much material and labor are needed for the next six months? Do you have realistic historical data to help predict collections over the next three months?)

When in use, a good cash management plan will help conserve and accurately allocate cash in troubled times; and, it will help save money and interest in prosperous times. Remember, input from all departments is necessary if one is to develop an accurate model that will give management a comprehensive look at cash flow.