Forecasting Cash Flow With An Integrated Spreadsheet
by Scott Pickard
Cash is king, as the old saying goes. It is the one resource a company cannot
survive without for any length of time until the doors are closed, voluntarily or
involuntarily, which is why the CEO must find or develop a method to reliably
understand and predict the company's current and future ability to generate
the cash it needs to pay all of its bills.
Forecasting cash flow is much easier than it used to be, thanks to the
convenient number-crunching power of PCs and spreadsheet software like
Excel® and Lotus®, which allows one to build an Integrated Spreadsheet
which links a projected balance sheet and income statement for the
business. The Integrated Spreadsheet is the tool that will give any CEO the
positive direct control they must have over the financial rudder of the
A wise time investment for CEO's
A company's cash flow at any point in time is a juxtaposition of payables,
receivables, debt service, capital expenditures, sales/repurchases of stock,
and other factors. An Integrated Spreadsheet handles this complex
financial interaction with electronic precision. Using this tool, a CEO can more
carefully predict where the company is heading or could be heading. That's
powerful planning and peace of mind for the executive/owner that shoulders
the burden of consistently meeting payroll and staying current with suppliers
on all bills.
• The Integrated Spreadsheet gives the CEO a rational way to
appropriately pace capital expenditures, quarterly (or even monthly)
bonus payments, and sweeps of excess cash into less liquid but
higher-returning financial instruments, at the earliest possible time.
• The Integrated Spreadsheet allows the CEO to look at the effect on
cash from big-picture business initiatives such as acquiring a new
business, selling off a division, developing and staffing a new
department, or launching a new product line.
• Using an Integrated Spreadsheet helps the CEO di