Budgeting & Forecasting › Cash Budgeting

How do you build sensitivity/scenarios into a cash forecast?

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Answer

Flex key drivers—sales volume, collection speed, cost levels, and timing—to produce best/base/worst cash scenarios, revealing how bad a downturn or a collection slowdown would hit cash and when. Stress-testing the cash budget (e.g., customers pay 30 days later) identifies the financing headroom needed and informs contingency plans.
Real-world example Stress-testing a 30-day slowdown in collections shows the overdraft facility must be larger than first thought.

Common follow-ups: Which drivers are most sensitive for cash? | Why stress-test collections?