A quick look at cash flow forecast example

Cash flow forecasts are a key aspect of financial management. Aiding in day to day business reporting and helping to identify and prevent liquidity issues that can cripple companies.

There are two separate formats for cash flow reports and we will take a look at what makes up a cash flow forecast example.

First there is the direct method. This looks at the companies receipts and disbursements, sometimes abbreviated to R and D.

The R, or receipts includes accounts receivable, receipts from sales and sales of assets or financing. The D or disbursements includes payroll, payment from accounts payable and financial elements such as interest on debts or dividends on shares.

By dividing each of the financial elements into an incoming or outgoing item and then collating the data on a spreadsheet one can get an accurate model of the companies cash flow.

A great list of free templates for this can be found on the following link:


The Three more complicated and indirect methods include ANI, PBS and ARM methods.

The ANI or Adjusted Net Income method starts with operating income and then subtracts outgoings to projects cash flow. The Operating income is this instance is referred to as EBITDA. Earnings before Interest, Tax, Deductions and Amortisation.

The Pro-forma PBS account type looks at strictly cash only accounts, assuming that cash will be correct when all other balance sheets have been calculated correctly.

Finally ARM or the Accrual Reversal Method allows greater medium or long term accuracy in cash flow predictions.

In each instance we recommend using the method which suits you best but for general use a combination of the R & D and ANI methods works best.

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