Methods of Cash Flow Forecasting
There are typically two central types of cash forecasting strategies, and they include direct and indirect. The express cash estimation is a strategy of predicting money flows and balances for small term liquidity administration functions (Pae & Yoon, 2012). It always but not often incorporates system centered cash flows to create the estimate as close to actual time as possible. On the other hand, indirect cash estimation usually is longer period in nature, and it depends on a variety of indirect strategies of building up cash estimate including the use of expected balance sheet and revenue statements. In summary, the running of cash forecast procedure in many institutions is controlled by the finance group, and the work to be fulfilled in conditions of assembling a forecast position engages gathering information.
Pae, J., & Yoon, S. S. (2012). Determinants of analysts’ cash flow forecast accuracy. Journal of Accounting, Auditing & Finance, 27(1), 123-144.