{"id":307,"date":"2022-07-12T17:02:39","date_gmt":"2022-07-12T17:02:39","guid":{"rendered":"https:\/\/www.orama.ai\/academy-tesoreria\/scenario-forecasting-predict-your-cash-flow\/"},"modified":"2026-10-22T21:53:10","modified_gmt":"2026-10-22T21:53:10","slug":"scenario-forecasting-predict-your-cash-flow","status":"publish","type":"post","link":"https:\/\/www.orama.ai\/en\/academy-tesoreria\/scenario-forecasting-predict-your-cash-flow\/","title":{"rendered":"Scenario forecasting: predict your cash flow"},"content":{"rendered":"<p>Having a <a href=\"https:\/\/www.orama.ai\/en\/academy-tesoreria\/annual-cash-flow-forecasts\/\" title=\"good scenario forecasting\">good scenario forecast<\/a> helps you to avoid risks in your company. This means that you will be able to have solutions to a possible problem that may arise in the future. <a href=\"https:\/\/www.orama.ai\/en\/features\/\" title=\"multiple scenarios\">Multiple scenarios<\/a> must be prepared prior to a crisis. The idea is to foresee it before going through it. So we tell you how to make a good scenario forecast: predict your cash flow.<\/p>\n<p>Having a worst-case scenario will help you know how to act, or what actions to take, before the crisis becomes a reality, allowing us to prepare ourselves to take the best alternatives. This type of <a href=\"https:\/\/www.orama.ai\/en\/academy-tesoreria\/what-is-cash-flow-and-how-is-it-calculated\/\" title=\"cash flow management is essential\">cash flow management is essential<\/a> to anticipate a shortage of cash.<\/p>\n<p>Preparing multiple cash flow scenarios with different hypothetical situations helps to think through the consequences of different decisions and <a href=\"https:\/\/www.orama.ai\/en\/academy-tesoreria\/cash-account-everything-you-need-to-know\/\" title=\"what impact they have on the treasury.\">what impact they have on cash flow<\/a>.<\/p>\n<p>We will mention three, which can help you to have a starting point.<\/p>\n<h3><strong>The ideal number of<\/strong> financial <strong>scenarios<\/strong><\/h3>\n<ul>\n<li>An <strong>optimistic scenario<\/strong>: the numbers improve, in the event that everything turns out better than expected.<\/li>\n<li>A <strong>pessimistic scenario<\/strong>: Think about the worst case scenario and that the objectives set are not met.<\/li>\n<li>A <strong>realistic scenario<\/strong>: Based on data and analysis you have a perspective of what could happen.<\/li>\n<\/ul>\n<p>Some important considerations to keep in mind when <a href=\"https:\/\/www.orama.ai\/en\/academy-tesoreria\/annual-cash-flow-forecasts\/\" title=\"create new anticipation scenarios,\">creating new anticipation scenarios<\/a>:<\/p>\n<ul>\n<li>There will always be factors that you cannot avoid, because they will be out of your control and therefore you will not be able to anticipate them.<\/li>\n<li>If you know the economic situation in advance, you will know how to face it in the best way.<\/li>\n<li>New situations may arise, such as a health crisis or a regulatory change, which create uncertainty and are beyond our control.<\/li>\n<li>The world has many aspects and the socio-economic one is very important, as it directly affects our business. Being up to date will help to foresee some negative scenarios.<\/li>\n<\/ul>\n<h2>How to adjust your scenarios when the context changes<\/h2>\n<p>When the environment changes suddenly, the assumptions behind your initial forecasts can become outdated. Planning the future of your cash then becomes one of the most important processes in the company: accurate forecasts let you act with agility.<\/p>\n<h3>Review your assumptions<\/h3>\n<p>The first step is to review your assumptions. You made many of them to build your initial forecasts: some you will have clearly in mind, but others will be more hidden. Identify them so you can adjust them and update your forecasts, understanding how the new situation affects them. Refine them as much as you can with a realistic view of the market and support them with real data, not just estimates.<\/p>\n<h3>Analyse your numbers<\/h3>\n<p>Review how your numbers have evolved over recent months. Look closely at your customers: which ones are doing well and which ones are struggling. Those with difficulties will probably continue to have them, and those who seem comfortable may start to struggle at any time. Identifying these situations and reflecting them in your forecasts is key: surprises in cash forecasts are never good.<\/p>\n<p>A simple way to spot customers with potential difficulties is to review the payment dates of their latest invoices and look for delays, or for lower invoice amounts if your billing is tied to volume.<\/p>\n<p>Review your sales too: if the way you sell has changed, analyse each step of the sales funnel, from the acquisition channel to the conversion at each stage. The more you fine-tune each step, the more robust your forecasts will be. It helps to see how your key business metrics have evolved, such as conversion to sale per customer meeting or the costs assigned to each customer.<\/p>\n<h3>Plan and act with agility<\/h3>\n<p>Once your numbers are clear, start planning. Your forecasts will not be static: you will have to adapt them as changes arise. Take into account the estimated collection and payment dates of your invoices and apply the most realistic collection periods you have identified.<\/p>\n<p>Once everything is laid out, you will see where you need to cut expenses, where you can increase them and whether you will need financing in the coming months. The sooner you identify your future needs and problems, the sooner you can start solving them.<\/p>\n<h2>Advantages of scenario forecasting software<\/h2>\n<p>Forecasting cash in Excel means <a href=\"https:\/\/www.orama.ai\/en\/academy-tesoreria\/advantages-of-orama-over-excel\/\">creating endless tables<\/a> that are prone to error. Scenario forecasting software starts from your up-to-date bank data and lets you create and compare scenarios in a few clicks, taking into account how your sales, costs and profits evolve over time.<\/p>\n<h3>1. Understand where your resources go<\/h3>\n<p>Full transparency of expenditure and a good understanding of financial resources are essential to plan for the future. This way you can avoid unexpected bills and <a href=\"https:\/\/www.orama.ai\/en\/academy-tesoreria\/how-can-a-company-save-money\/\">look for alternatives in time<\/a>.<\/p>\n<h3>2. Forecast and simulate with real data<\/h3>\n<p>With your accounts connected (in Orama, banks are updated up to 4 times a day), the tool captures your company&#8217;s income and expense trends and gives you an idea of where the business will be in the coming months. On top of that forecast you can simulate alternative scenarios and prepare solutions for each one. This is especially valuable for SMEs and startups, where <a href=\"https:\/\/www.orama.ai\/en\/academy-tesoreria\/what-is-cash-flow-and-how-is-it-calculated\/\">cash flow<\/a> matters even more, particularly when customers pay late.<\/p>\n<h3>3. Take action: avoid deviations<\/h3>\n<p>With forecasts and deviations in view, you can act today to avoid <a href=\"https:\/\/www.orama.ai\/en\/academy-tesoreria\/types-of-bank-financing-for-small-and-medium-sized-companies\/\">running out of cash<\/a> tomorrow. Some actions we recommend:<\/p>\n<ul>\n<li><strong>Resource planning: <\/strong>How much do we think we will need for a task and how much will it cost? When this resource is used, the key is to allocate each expense to control and adjust it.<\/li>\n<li><strong>Proper roll-out of the tool in the team: <\/strong>It is key to appoint someone to implement it, use it in meetings and answer the team&#8217;s questions.<\/li>\n<li><strong>Plan milestones or key moments: <\/strong>Set dates to review what you have achieved and replan if necessary. For new projects, set frequent milestones to bring your estimates as close as possible to reality.<\/li>\n<li><strong>If you foresee changes, plan different scenarios: <\/strong>Define different cases to see how those changes affect the whole.<\/li>\n<\/ul>\n<h2>Scenario forecasting: predict your cash flow<\/h2>\n<p>Finally, we will mention 3 signs that <a href=\"https:\/\/www.orama.ai\/en\/academy-tesoreria\/cash-management-in-the-company\/\" title=\"identify that your treasury is in trouble.\">your treasury is in trouble<\/a>.<\/p>\n<p><strong>1. You are too optimistic about your customers&#8217; payment terms: <\/strong>They cannot guarantee cash coming into your account, so the scenario would fail on the revenue side: invoicing and customer payments. Many companies plan to collect at 60 days when their customers pay, on average, at 90. Use the real collection period in your forecast: it will give you a more reliable estimate and more time to make adjustments. Even so, there may be late-paying customers who leave you without enough cash to make the necessary payments and cause a cash flow problem.<\/p>\n<p><strong>2. You cannot deliver what you have sold: <\/strong>If you cannot deliver what you committed to on time, you may not receive the money and not be able to meet your objectives. In addition to letting customers down and looking bad as a supplier. This generates cash flow problems due to non-compliance with established contracts.<\/p>\n<p><strong>3. Outstanding receivables are too high: <\/strong>If you have a very large receivables portfolio, it is possible that you are not acting efficiently in the collection, which generates a lack of cash, i.e. a problem in the cash flow, because collections arrive later than payments.<\/p>\n<p><a href=\"https:\/\/app.orama.ai\/?register=true\" rel=\"nofollow noopener\" target=\"_blank\">Try Orama free for 7 days<\/a> and simulate scenarios based on your financial forecasts. You will never again be caught off guard by a lack of liquidity due to poor cash management.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Having a good scenario forecast helps you to avoid risks in your company. This means that you will be able to have solutions to a possible problem that may arise in the future. Multiple scenarios must be prepared prior to a crisis. The idea is to foresee it before going through it. So we tell [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":1939,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","_joinchat":[],"footnotes":""},"categories":[20,19],"tags":[],"class_list":["post-307","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-forecast","category-treasury"],"_links":{"self":[{"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/posts\/307","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/comments?post=307"}],"version-history":[{"count":3,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/posts\/307\/revisions"}],"predecessor-version":[{"id":1254,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/posts\/307\/revisions\/1254"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/media\/1939"}],"wp:attachment":[{"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/media?parent=307"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/categories?post=307"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.orama.ai\/en\/wp-json\/wp\/v2\/tags?post=307"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}