How do I use Cashflow Plan to forecast external funding needs?
Build your projections (sales, costs etc.) but, initially, exclude any assumptions about external funding. Run Cashflow Plan and review the rows in the monthly balance sheets relating to Line of credit (Overdraft). The peak values in these rows will indicate the external funding need. The next question is whether the funding peak can be lowered and what is the optimum type, terms etc. of funding – use Cashflow Plan to explore alternative scenarios. Check out our White Papers about Managing Working Capital, Making Cashflow Forecasts and Preparing Financial Projections.
