Cash Flow Forecasting

Overview

TreasuryPath’s cash flow forecasting lets you project future cash positions by modeling expected inflows and outflows. You create forecast scenarios, populate them with expected cash flows (one-time or recurring), and compare different scenarios side by side to support decision-making.

Key Concepts

Forecast Scenarios

A forecast scenario is a container for a set of expected cash flows over a defined time period. Each company has a primary scenario that represents the baseline forecast, plus any number of additional scenarios for what-if analysis.

Scenarios support:

• Period unit - Monthly or weekly granularity
• Duration - How many periods the forecast covers
• Parent scenarios - Create child scenarios that branch from an existing scenario for comparison
• Freezing - Lock a scenario at a point in time to preserve it as a historical snapshot

Expected Cash Flows

An expected cash flow is a single projected transaction: money coming in or going out on a specific date. Each expected cash flow has:

• Amount and currency - How much and in what currency
• Expected date - When you expect the cash movement to occur
• Direction - Inflow (money coming in) or outflow (money going out)
• Cash category - What type of cash movement this represents
• Activity type - The accounting classification
• Recurrence type - One-time or recurring

Cash Categories

Cash categories organize your expected cash flows into a hierarchical structure. Categories have:

• Direction - Whether the category tracks inflows, outflows, or internal transfers
• Default activity type - The default accounting classification for flows in this category
• Hierarchy - Categories can have parent categories, letting you build tree structures (e.g., “Revenue” > “Product Revenue” > “Subscription Revenue”)
• Forecast inclusion - Whether the category should be included in forecast calculations

Activity Types

Each expected cash flow and cash category has an activity type that maps to standard cash flow statement classifications:

Creating Expected Cash Flows

1. Navigate to Cash Flow and select your forecast scenario
2. Click Add Expected Cash Flow
3. Select a cash category
4. Enter the amount and currency
5. Set the expected date
6. Choose the direction (inflow or outflow)
7. Select the recurrence type:
   • One-time - A single expected transaction on the specified date
   • Recurring - A series of transactions at a regular interval

Recurring Cash Flows

For recurring expected cash flows, you specify:

• Frequency - How often the flow repeats: daily, weekly, monthly, or quarterly
• Occurrences - How many times it repeats (1 to 52)

TreasuryPath generates individual expected cash flow records for each occurrence based on your frequency and start date.

Recurring Cash Flow Templates

For cash flows that repeat on a regular schedule (like monthly rent or weekly payroll), you can create recurring cash flow templates. Templates define:

• Name - A descriptive label for the recurring flow
• Amount and currency
• Direction - Inflow or outflow
• Start date and optional end date
• Recurrence rule - The schedule pattern

Templates can be linked to a cash category and entity for consistent categorization.

Comparing Scenarios

To compare different forecasts:

1. Create a child scenario branching from your primary scenario
2. Modify expected cash flows in the child scenario (add, remove, or change amounts)
3. View both scenarios side by side to see the impact of your changes

This is useful for modeling “what-if” questions like: What happens to our cash position if we delay a large payment by 30 days? What if we accelerate revenue collection?

Frequently Asked Questions

Can I have multiple forecast scenarios?

Yes. Every company has one primary scenario, and you can create as many additional scenarios as you need. Child scenarios branch from a parent for easy comparison.

What is the difference between one-time and recurring?

A one-time expected cash flow represents a single transaction on a specific date. A recurring expected cash flow generates multiple transactions at a regular frequency (daily, weekly, monthly, or quarterly) for a specified number of occurrences.

How are cash categories hierarchical?

Each cash category can have a parent category, creating a tree structure. This lets you organize flows at whatever level of detail you need. For example, “Expenses” can have children like “Payroll,” “Rent,” and “Software,” each of which could have further subcategories.

Can I freeze a scenario?

Yes. Freezing a scenario locks it at a point in time so it cannot be modified. This is useful for preserving a forecast as a historical record to compare against actual results later.

How does forecasting connect to reconciliation?

Expected cash flows are the bridge between forecasting and reconciliation. Once a forecasted cash flow actually occurs, you can match it to the real bank transaction through the reconciliation process. See Reconciliation for details.