Build the dated cash decision map
| Term | Definition in this review | Decision question |
|---|---|---|
| Opening cash | Reconciled available cash at the start of the period | Is the scenario starting from a verified balance? |
| Dated receipts | Cash expected on a stated date, separated by confidence | Which receipt timing creates the downside exposure? |
| Dated payments | Obligations and planned outflows on realistic dates | Which payment is fixed, negotiable or optional? |
| Lowest balance | The minimum projected cash balance within the period | When does the business have the least room for error? |
| Closing cash | Opening cash plus receipts less payments for the period | What balance carries into the next period? |
Closing cash = opening cash + cash receipts - cash payments
- opening cash
- Reconciled available cash at the start of the period (currency) — business record
- cash receipts
- Cash arriving during the period on the dates used in the scenario (currency per period) — dated user assumption or business record
- cash payments
- Cash leaving during the period on the dates used in the scenario (currency per period) — dated user assumption or business record
Apply the same basis throughout the review and state how indirect tax, financing flows and owner movements are treated.
- Reconcile opening cash and define the review horizon and time step.
- Place receipts and payments on realistic dates, with uncertain receipts shown separately.
- Roll each closing balance into the next period and identify the first and lowest shortfall.
- Trace the gap to receivable, inventory, payable, operating, financing or owner-movement timing.
- Change one available assumption, compare the new low point and record the operational trade-off.
- Assign an owner, action date and review trigger; escalate early when obligations may not be met.
Work through one bounded scenario
A three-week cash timeline
The figures below are neutral user assumptions in currency units. They are not a forecast or market benchmark.
| Period | Opening cash | Receipts | Payments | Closing cash |
|---|---|---|---|---|
| Week 1 | 12,000 | 8,000 | 15,000 | 5,000 |
| Week 2 | 5,000 | 4,000 | 8,000 | 1,000 |
| Week 3 | 1,000 | 10,000 | 7,000 | 4,000 |
The next step is to identify which Week 2 receipt or payment assumption is both material and commercially available to change. Moving a receipt earlier, reducing inventory or moving a supplier payment can affect customers, supply, terms and relationships; released cash is not free profit.
Move from profit reconciliation to the dated cash decision
| Finding | Next workflow | What it does not decide |
|---|---|---|
| Profit and cash move differently over the same stated period | Cash Flow versus Profit guide | Reconciles the likely driver; it does not prepare accounts or decide solvency |
| The low point depends on exact near-term receipt and payment dates | 13-Week Cash-Flow Forecast | Does not guarantee receipt or payment timing |
| Cash is tied up in receivable, inventory or payable days | Working Capital Planner | Does not create a dated weekly forecast |
| Projected cash approaches a business-declared minimum cash floor | Cash Runway Planner and cash-buffer policy | Tests a user policy against dated cash; it does not prescribe an adequate buffer |
| A collection-days scenario may release cash | Receivables Collection Impact Planner | Does not determine enforceable customer terms |
| One delayed invoice creates funding or administration cost | Late Payment Cost Planner | Does not provide debt-collection or legal advice |
| Lease and purchase options have materially different dated outflows or terminal amounts | Lease versus Buy Equipment Planner, then the expansion decision scorecard for evidence state, deadline and reversibility | Compares entered dated cash flows only; it excludes tax, depreciation, approval and any residual value not entered, and remains distinct from rent-versus-own utilisation economics |
Cash-flow review questions
- Why can a profitable business still have a cash shortfall?
- Profit recognises income and expenses under an accounting basis; cash depends on when money actually arrives and leaves. Inventory, receivables, payables, financing and owner movements can make the timing different.
- How far ahead should a review look?
- Use a horizon and time step that expose the decision. A near-term weekly view can show an immediate gap, while a longer monthly view can show seasonal or investment pressure. Keep the starting balance and date basis consistent.
- Should the review change several assumptions at once?
- Start with one change so its effect and trade-off remain visible. A combined scenario can follow, but preserve the baseline and each intermediate step so the result is explainable.
Methods used in this guide
- Margin101 Working Capital methodology — Margin101: Receivable, inventory and payable balance-change assumptions and limitations.
- Margin101 13-Week Cash-Flow Forecast methodology — Margin101: Dated weekly cash roll-forward and scenario boundaries.
- Margin101 Lease versus Buy Equipment methodology — Margin101: Like-for-like dated lease and purchase cash-flow collections and terminal-scope limits.