AJ-13Short-Term Cash Flow Forecasting

Kristen Kern, MacKay Sposito

Deltek Insight 2019

• Kristen Kern - ControllerKKern@MacKaySposito.com

360-356-1579

Cash Flow Forecast – Short Term

• Kristen KernKKern@MacKaySposito.com

360-356-1579

• Kristen Kern - Controller

Short Term Cash ForecastAR Section of Cash Flow Forecast Report

• Weekly Cash Received Projection:Based on each Invoice date + client average days to pay

• Beyond the Current Month Cash Projection:Only as good as invoice final completions

• Overdue:Invoice date + client average days to pay exceed todays date

• Outstanding:AR & WIP total SHOULD ALWAYS tie to your AR & WIP Aging’s

WIP and Cash Receipt ForecastWeekly Short Term Forecast

WIP Section of Cash Flow Forecast

• Average days to Bill

• Average days to Pay

• WIP - # of Days to Convert

• WIP – Discount %

Step 1 – Run the Cash Flow Forecast Report

Enter:** No. of Days to Convert ** WIP Discount

Expand WIP Forecast Section - “Use Drilldown”

** Days to Bill –Global - average days to Bill

** Days to Convert –Informed by user running report

** Days to Pay –Client specific - based on historical average days to pay

Short Term Cash Flow – A/R exhibit

Expand

Short Term Cash Flow Daily Calc - exhibit

Accounts Payable – might have “wiggle room” on payment schedule based on weekly cash balance

Accounts Payable - Short Term ForecastAP Forecast –Sections:

1) 1st of Month = Rent/Health Insurance2) Recurring Monthly Expenses

• Average/Estimate by Vendor Due Date

3) Employee Reimbursements4) Sub-consultants

• Identify Job/Client Sub associated with• Client Inv – how many days to pay – Change due date

on SubConsultant Invoice to reflect Clients # of Average days to pay

• Pay when Paid Report w/accurate Due Date

5) Known Misc – Distributions, lump sum pymts

Deposit Tracking - Bank to Ajera Forecast

Ajera – Cash Forecast in Widget Gallery

Beware of:

** Totals in Report not tying to Agings (WIP, AR, AP)** Sum of buckets NOT tying to Outstanding Totals (Widget AR Buckets = $1,803,717.77; Total = $1,777,581.96; diff = $26K)

** WIP, by definition, won’t collect cash until invoiced – Widget reflects WIP receiving WIP immediately??** Forecasts only as good as Invoices/Time in system – AR provides a 4-6 wk opportunity for a look forward based on Client Billings – (Difficult with WIP & AP to see too much into the future – Time/Expenses constantly being informed….)

** Weeks in Widget – starts on a Sunday, end on a Saturday – not always a “true” month

Cash Flow Forecasting…Hint – Use the system data/tools available to you!

1) A/R – Client Invoice Date + Days to pay2) A/P – Recurring + Expense Reimbursements3) Sub Consultants – Client Days to Pay becomes

Sub Invoice Due Date = Pay when paid rpt tool4) Payroll – Estimate Cash outflows + 401K/Tax

funding

Questions?Your 2 Best Friends as an Accountant:

Predictable Timing & Money