Three-Way Cashflow Forecasting | Keeping a better handle on your business performance


By Ben Hitchings

best business accounting firm

Successful businesses need a strong strategic foundation, detailed (accurate) data and insights to make the right business decisions – enter Three-Way Cashflow Forecasting…

Three-way modelling is invaluable as it gives you first-hand insight into the impact of business decisions in advance through forecasts that detail the future impacts. These impacts can be positive or negative, and with a three-way forecast, it allows you to firm or change your decision based on the anticipated outcome.

Like the name suggests, a three-way forecast combines three key financial reports into one neat little package – it links your Profit and Loss (P&L), Balance Sheet and Cashflow reports together giving these reports greater credibility, and allowing you can predict your future cash position and financial health of your business.

Three-way forecasts can be used to help your businesses in various situations, including:

  • Applying to banks or investors for finance – provide confidence and clarity surrounding your business performance to assist the decision-making process for lenders and/or investors.
  • Model business ideas or decisions based on different scenarios – determine the potential impact, and identify solutions to future problems.
  • As part of the due diligence for a business purchase – provide confidence, or highlight a shortfall in proposed figures.
  • Negotiating payment arrangements – provide credible and transparent figures to help get you out of a sticky situation with the ATO or other creditors.

Not only will it improve the level of financial management and control within your business, depending on your accounting software, but figures may also be uploaded to give you comparisons of actual to budget. Any deviation from budgeted figures will be flagged, allowing you to intervene and take action before it becomes an issue.

Want to know more?

Should you have any questions in relation to three-way cashflow forecasting, please contact Ben Hitchings, Business Advisory Associate Director, for assistance.

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.



Related Posts
taxmilitary workers