Cash Basis Model

Intelligence Cash Planning and Analysis (ICP&A) is a dynamic dashboard with actionable insight to analyze a company's future financial health through data maturity mathematical modeling of receivables and payments networks to support a company's most critical business decisions.

Building a Cash Flow Model: The Foundation

To create a solid cash flow model, we need a deep understanding of:

Business Needs: What are the specific goals and requirements of the business?
Agreements and Contracts: What are the legal and contractual obligations?
Organizational Capabilities: What are the organization's strengths and weaknesses?
Project Planning: What are the key milestones and deadlines?
Cost Estimation: How much will it cost to implement the project?
Workforce Planning: How many people are needed, and when?

Key Considerations for Model Development

Stakeholder Requirements: Who are the key stakeholders, and what do they need?
External Environment: How might economic, social, and political factors impact the business?
Implementation Strategy: What is the best approach to execute the plan?
Financial Arrangements: How will the project be funded?
Financial Resources: What funds are available, and how will they be used?

Payment and Receivable Strategies and Network

The cash flow model should account for different payment methods, such as:

Upfront Payments: Payments made before the work begins.
Stage Payments: Payments made at specific stages of the project.
Final Payments: Payments made after the project is complete.
Accrued Payments: Costs that accumulate over time and are paid with out any lag.

Analyzing Cash Flow

Cash flow analysis is crucial for effective project management. It helps us understand:

Cash Balance: How much cash is available at any given time?
Funding Gaps: Are there periods where funds may be insufficient?
Cash Flow Patterns: What are the trends in cash inflows and outflows?

We can use various techniques to analyze cash flow, including:

Scenario Analysis: What-if scenarios to assess different outcomes.
Sensitivity Analysis: How sensitive is the cash flow to changes in key variables?
Lifecycle Analysis: Cash flow over the entire project life cycle.
KPIs and Alarms: Key performance indicators and alerts for potential issues.

Managing Uncertainty

Due to inherent uncertainties and risks, cash flow models must be flexible and adaptable.

We can use expert judgment and risk analysis techniques to improve the accuracy of our forecasts.

Explanation of Key Terms and Concepts

Cash Flow: The movement of money into and out of a business.

Financial Model: A quantitative representation of a business's financial performance.

Stakeholders: Individuals or groups with an interest in a business or project.

Macro-environmental Factors: Broad economic, social, political, and technological factors.

Micro-environmental Factors: Factors specific to the industry and market.

Execution Plan: A detailed plan for carrying out a project.

Cost Estimation: The process of estimating the cost of a project.

Implementation Strategy: A plan for how to implement a project.

Outsourcing: Hiring a third-party to perform a task.

Pre-payments: Payments made in advance.

Stage Payments: Payments made at specific stages of a project.

Post-payments: Payments made after the work is completed.

Accrual Payments: Payments for expenses that have been incurred but not yet paid.

What-if Scenario Analysis: Analyzing different possible outcomes.

Sensitivity Analysis: Analyzing how sensitive a model is to changes in input variables.

Lifecycle Analysis: Analyzing the cash flow over the entire life of a project.

KPIs: Key Performance Indicators.

Risk Analysis: Identifying and assessing potential risks.