Chapter 4 : How to create a Cash flow planning?
We are all familiar with Cash flow planning from our private lives. But how do you create one? About the basic procedure for liquidity planning and COMMITLY.
Chapter 1 - Introduction Cash flow planning
Chapter 2 - Why Cash flow planning at all ?
Chapter 3 - Quality of the Cash flow planning
Chapter 4 - How to create a Cash flow planning?
Chapter 5 - Short-term Cash flow planning
Chapter 6 - COMMITLY common procedure
Cash flow planning sounds complicated, but basically we are all familiar with it - whether it's a household budget or managing our own account balance. But how do we transfer this principle to the corporate environment? This chapter shows you step by step how to create a sound Cash flow planning .
The basic formula: Simple but effective
Account balance today + planned income and expenditure = account balance tomorrow
This approach is the basis of all Cash flow planning. Based on this formula, companies can make decisions such as
- Should a major purchase be postponed?
- Is a transfer from the reserve account necessary?
- Should a salary negotiation be initiated?
In a business environment, the process is similar, but more extensive and structured. A distinction is made between two types of planning:
- Short-term Cash flow planning - Focus on the coming days and weeks.
- Long-term Cash flow planning - Focus on months and years.
Characteristics of the short-term Cash flow planning
The two planning approaches also have something to do with the characteristics of the people involved. First, let's take a closer look at the "operational planner":
The operational planner is often also responsible for accounting. In this respect, the approach is perfectly understandable. The most important feature of accounting is that no entry can be made without a receipt AND that every cent counts.
But how can we plan for the future with these conditions? The only way out of this situation is to stick to the open items. These show the future inflows and outflows from the bank account, insofar as they are available.
Characteristics of long-term planning
It is not surprising that the long-term planner has a different approach. Most likely driven by their own objectives, such as sales targets, the focus here is on annual or even quarterly targets.
This is also easy, because here the calculation is not made exactly to the euro, but is usually rounded to the nearest thousand euros. This makes access much easier mentally.
Dream Team of Planning
Unsurprisingly, the best planning consists of combining the strengths of both people:
Cash flow planning made easy - All decisions firmly under control.
COMMITLY is your software tool for better cash flow management - developed by financial experts and entrepreneurs who know what is important when it comes to cash flow and Cash flow planning.