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Accounting and finance would be so much easier if every company had a DeLorean, flux capacitor, and crazy-haired scientist squirreled away in the basement. At a moment’s notice, your designated Marty McFly could leap into the future, grab financial data by the fistful, and return to the present day, a conquering hero to every single person in your accounting and finance departments. Reporting would be painless, less sleep lost, and far fewer spreadsheets cursed with colorful language that would make a high school football coach blush.

Download: 13-Week Cash Flow Forecast Model

Unfortunately, as much as your friends at Embark would like to tell you to look under your chair right now and find your very own flux capacitor -- of course, courtesy of your friendly neighborhood financial wizards -- such is not the case. We do, however, have the next best thing to offer and that, as old timers say, is nothing to sneeze at. Out of the largess of our hearts and authentic desire to help our financial brethren, Embark is here to offer you our 13-Week Cash Flow Forecast template, now available for you to download and use at your heart’s delight.

Our template, coupled with a few simple yet extremely beneficial best practices, can lend powerful, streamlined insights to your company’s finances. Say, for instance, you’re an accountant tasked with a forecasting project, but you either don’t have a finance department or they’re already too busy to handle the task. While forecasting is typically part of finance’s domain and might give you a distinct fish-out-of-water feel, fear not, oh mighty accountant. Our template was designed specifically for accountants by accountants, giving you the tools and perspective needing to turn your forecasting lemons into refreshing lemonade.

On that note, take a few minutes to download our 13-Week Cash Flow Forecast template, look over the following tips and best practices, and be the forecasting dynamo you were born to be. We’re proud of you, McFly.


Setting the Stage

First of all, remember that, like snowflakes and velvet Elvis paintings, no two companies are ever alike. Particular organizations might have particular needs that require specific line items, formatting, or any number of variables. Of course, that’s why our template is just that -- a template. Use it as a reliable starting point, not an absolute solution.

With that awkwardness now behind us, let’s proceed, shall we? Embark designed the template to adhere to the traditional 3-section GAAP model, separated into operating cash flow, investing, and financing sections. Naturally, the operating cash flow component of the model consumes the most time and effort given its importance to day-to-day operations. With investing and financing essential but less frequent and easier to predict, the bulk of the template concentrates on cash flow items. Estimated sales or anticipated cash flows over the next three months are a more slippery slope, generally a bit on the temperamental side and, thus, more difficult to predict with accuracy and reliability.

That said, although GAAP permits both direct and indirect methods for operating cash flow and, depending on your background, it’s entirely possible you’re more accustomed to the indirect method for GAAP purposes, Embark recommends using the direct method when dealing with the forecasting of operating cash flows. As convenient as historical “indirect-method” operating GAAP cash flows might be, actual inflows and outflows are far better for accuracy and reliability.


A Quick Walkthrough

As you’ll see once you download Embark’s 13-Week Cash Flow Forecast template, the model contains these three sections:

  • Operating Cash Flow: Operating inflows (operating receipts and others), operating outflows (fixed and variable costs from several areas depending on the company, product cost of sales, personnel/payroll costs, occupancy costs, general & administrative expenses, and other costs)
  • Investing: Capital expenditures (the purchase of property, plant, equipment, and other), acquisitions, inflows such as divestitures, sales of investments, other investing activities
  • Financing: Debt, shareholders’ equity activity, lease payments, other financing items

Throughout the sections, always keep these considerations in mind when entering each line item. Doing so will, along with model assumptions, improve the accuracy of the results.

  • One-time events and how these might affect the cash flow
  • Exchange rates and the effects on any international operations/subsidiaries
  • Benefits of a line of credit/revolving debt. A revolver could allow you to increase your cash flow when needed and paid down with excess cash.

Also, keep in mind that a 13-week cash flow is dynamic and fluid, evolving with time and additional data points as they come in. Therefore, you should continually compare actual results against those from your forecasts. Likewise, employ a rolling 13-week forecast that builds on itself, continuing to refine your line item assumptions as actual figures stream in.


Format Your Model

Although extremely convenient and informative, our template doesn’t operate in a vacuum. Configuring it to the specific needs of your organization is the only way to maximize its effectiveness for your particular organization. In the operating cash flow section, be sure to tailor the line items to your own operations, using multiple inputs for all of your inflows and outflows, including sales receipts, rent, sales costs, and anything else needing inclusion. Of course, the same is required for the investing and financing sections as well.


Final Thoughts

Your 13-Week Cash Flow Forecast model will only be as good as the data you enter into it. Unfortunately, this is not one of those rare times in life when you start with a lump of coal and end up with a diamond. In other words, if you start with bad data, your results will be inaccurate and unreliable. Take the time to fine-tune your data as you receive it and develop a system that allows you to predict your cash inflows and outflows over the next 13 weeks. These will vary widely from company to company and industry to industry. Therefore, a manufacturing firm should not expect to have the same template as a consulting firm, and vice versa.

Download: 13-Week Cash Flow Forecast Model

As always, Embark will be here to guide you through your 13-week forecasting journey, continuing to crack lousy jokes, stretch metaphors beyond comprehension, and, most importantly, provide a beneficial compass as you wind your way through the financial forest. So lace up those boots, grab some sunscreen, and forecast away.

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