Cash Flow planning is included for one entity

Description

Incorporation of cash flow planning in Corporate Performance Management (CPM) software is essential for small to medium businesses. To aid in budgeting and forecasting, the ability to include this component for a single entity allows businesses to predict the company's cash flow and take necessary actions to maintain financial stability.

Example Use Case

Scenario: A small to medium-sized eCommerce company uses CPM software to plan budgets and forecasts. However, they face difficulties in accurately predicting cash inflows and outflows due to the absence of a dedicated cash flow planning component.

Solution: After integrating cash flow planning into their existing CPM software, the eCommerce company will have a clear view of their finances. Concerning one entity, be it a product line or sales region, they can better predict future cash inflow and outflows and make well-informed decisions regarding budget allocations, resource planning, and performance forecasting.

Considerations

Planning tools generally contain cash flow statements, but are used more for summarized forecasting and actuals reporting. For true day by day cash flow forecasting, you really need a dedicated system that is tied to a combination of the bank and your accounts payable system. In other words, if your primary requirement is cash flow forecasting, a traditional budgeting and forecasting tool is not what you're looking for.

That said, cash flow planning at a higher level can be crucial when looking at business expansions, hiring planning and so on. For example, your workforce model for adding salespeople might have a cash flow component built in as those salespeople ramp. That will help with planning sales support hires.

Questions to Ask a Vendor

• Real-Time Updates: Does your CPM offer real-time data updates to ensure we have the most recent cash flow overview for decision-making, or it this more of a monthly exercise?
• Linkage to the Model: Is cash flow connected to the broader model, such as workforce planning and product sales forecasting?