How accurate are your cash forecasts?
Likidera forecasts your cash balance for the days ahead with five different methods. It saves every forecast and checks it against the actual figure when the day comes, which shows which method works best on your company's data.
Forecast inputs
Everything that affects your cash flow, in one forecast
From these items, Likidera calculates a forecast cash balance for each day ahead.
- Bank and cash movements
- Invoices and due dates from your ERP
- Recurring items such as rent, payroll and insurance
- Loan and financing repayment schedules
- Tax deadlines such as VAT, withholding and stamp duty
- Daily central-bank rates for your currencies
When you load a new bank statement, the forecast is recalculated with the latest data.
Data comes in as files, so you never enter the same information twice.
How do you import bank and ERP data?Forecasting methods
Five methods for forecasting cash flow
Each method looks at cash flow from a different angle. Likidera runs all five on the same data, compares the past results of the four forecasting methods and recommends the one that has proved most accurate on your company's data. The unplanned-spending allowance is not part of this comparison.
Left of the tick: what already happened Right: how each method projects it
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Deterministic
What do the items with known due dates add up to?
Entered due dates
Invoice due dates, scheduled payments and recurring items are placed on their days, and the cash balance that results from recorded items is calculated. The other methods are measured against this baseline.
Uses Recorded due and transaction dates
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Holt-Winters
When do collections and payments rise?
Trend and seasonality
This method analyses the overall trend and seasonal repeats in past data. With enough history, patterns such as collections or payments rising at certain times of the year are reflected in the forecast.
Uses Past cash flow data
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Aging Decay
How much can you expect to collect from overdue receivables?
Receivables aging
Not every overdue receivable is equally likely to be collected. Likidera sorts receivables into aging buckets and weights each bucket by your past collection data.
Uses Past collection data and receivables aging buckets
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Counterparty Timing
When do your customers usually pay?
Real payment habits
Customers don't always pay on the due date. Likidera works out each customer's payment habits from past payment dates and calculates an expected payment date for open invoices.
Uses Past payment dates
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Contingency Buffer
How much should we set aside for the unplanned?
Contingency allowance
Not every cost is on the calendar in advance. Likidera looks at past unplanned costs and calculates a buffer amount that can be added to the forecast. This amount is not a firm cost forecast but an allowance for possible unexpected costs, so it is not scored on the variance matrix.
Uses Past unplanned costs
The methods' past results are compared on the same screen, and you choose which one to use.
Forecast accuracy
Forecasts tested against actual figures
Likidera compares every forecast with the actual balance and shows the gap separately 1, 7, 30 and 90 days ahead. You see how accurate the forecasts are on your own data.
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The forecast is saved
Every forecast is stored as it was on the day it was made, so later changes in the data do not mix with it.
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The actual figure is added
When the predicted day has passed, the actual balance from the statement you load is compared with the forecast.
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The forecast gap is measured
Likidera records each method's gap on short- and long-range forecasts separately. This shows whether a method consistently lands above or below the actual figure.
- Rows
- The forecasting methods being compared
- Columns
- How many days ahead the forecast looks
- Cells
- The measured gap for that method and horizon
- Trend
- Whether the gap has grown or shrunk since the previous measurement
- Insufficient history
- Marked in the cell when there are too few comparisons
A method that does well on one-week forecasts may not do the same at 90 days. The matrix puts a number on that difference, so the choice of method rests on measured gaps.
Payment patterns
Customers' payment habits feed into the forecast
Likidera reviews the payment dates and recurring movements in the data you import and shows when customers usually pay and when certain costs tend to occur. Where there is not enough data, it says so.
Movements are classified
Movements you import get a suggested category, and that classification is used in the cash flow forecast.
Recurring payment patterns
Regularly recurring payments and collections show up in your data. For example, you can define a collection that arrives every 45 days as a recurring item and add it to your plan.
Expected payment date for open invoices
Each open invoice shows its expected payment date and how confident that estimate is.
If data is insufficient, an “insufficient history” notice appears instead of a figure.
Scenario analysis
How possible changes would affect your cash flow
How would a late collection, a payment brought forward or an unexpected cost affect your cash position? Change the assumptions and compare up to four scenarios side by side. In Counterparty What-If, you can also see what happens if a single counterparty pays late, pays only part or does not pay at all.
Six adjustment types
- Mark a collection late
- Bring a payment forward
- Raise or cut a transaction amount
- Remove an item from the scenario
- Add a new cash movement
- Change a recurring item
What do you see in each scenario?
- The cash runway under the scenario, meaning roughly how many days your cash will last
- The date the balance first falls below the minimum level you set
- Whether available liquidity is sufficient
Looking at runway, minimum cash and funding needs together shows possible cash shortfalls in advance.
Frequently asked questions about cash forecasting
How much historical data does Likidera need to forecast?
Likidera forecasts from day one using recorded due dates and transactions. Methods that account for seasonal changes, overdue receivables and customer payment habits give more meaningful results as history builds up. Where data is insufficient, Likidera says so, so you can tell which forecasts rest on limited support.
Are taxes and loan repayments included in the forecast?
Yes. Supported tax deadlines and defined loan repayment schedules go into the same forecast as invoices and recurring items. The forecast balance you see includes them too. The tax calendar is for planning; it is not a substitute for tax advice.
See Likidera run on your own numbers
In the demo, we load your bank statements and counterparty list together and look at your cash flow for the coming weeks in Likidera. We'll also give you a quote that fits your needs during the call.
Or reach us directly: +90 (212) 275 90 60 · info@caretta.net