Summary / recommendations:
The forecast should always be planned prudently, so it is usually an internal plan. (Base case)
Always create a static plan for reporting purposes. This creates a reference point, a starting position, that can be used again and again in the future.
If the plan had to be approved by the bank, fix it by committing it. This prevents the plan from being changed by accident.
Use the PDF reports Plan and Deviation Analysis for the actual reporting. Financing partners can then see that a system for cash flow planning is in place AND that it is used. This earns points in the bank's internal risk assessment.
Avoid unmapped transactions; they signal planning that is unfinished or not maintained
Basic considerations:
Strategy
Situation
Point 1 - Strategy
The question here is: what do I want to show my bank?
Cash flow planning should always be done in the spirit of a "prudent businessperson", i.e. better cautious than with overly optimistic assumptions. This is usually expressed by setting inflows lower when unsure and, conversely, outflows higher. In addition, there is the time component, which is important in cash flow planning. We all know the wait for the payment of an invoice or a sale. The rule here is to calculate inflows later and outflows earlier than planned, especially if you already know from experience that a customer tends to pay late.
If the company has no problems with the expected liquidity development in such a scenario, you are on the safe side.
Of course there is Murphy's law: if something can go wrong, it will go wrong. But since cash flow planning, or the rolling forecast, is continuously adjusted when things change, this planning approach keeps you on the safe side.
Of course, in such a plan the liquidity does not always look as good as it should. And as a rule, this is a prudent plan that is created for internal purposes only and is not meant to be shared externally.
For such cases, COMMITLY lets you create scenarios or plans. These plans are independent of the rolling forecast and can be adjusted as you like. Scenarios are based on the forecast, and every change in the forecast also changes the scenario. For example, if you planned revenue rather low, you can create a better-case or best-case scenario in which you plan revenue, say, 5% higher.
Point 2 - Situation
Two possible starting situations
Ongoing operational reporting - where the company stands and how the expected future develops
Ongoing reporting, but as part of a loan agreement for which a cash flow plan had to be submitted
2.1 Ongoing operational reporting - where the company stands and how the expected future develops
In case 2.1, ongoing operational reporting, depending on the strategy (see above), you can create either a 12-month Forecast report or a 12-month PLAN report under REPORTING & EXPORTS and provide it to the bank.
2.2 Ongoing reporting, but as part of a loan agreement for which a cash flow plan had to be submitted
In case 2.2, another important aspect comes in. In such a case, the bank or financing partner wants to know how liquidity has developed compared to the situation at the time the loan was granted. If this applies, a separate, static plan should be created for the loan. Planning based on a scenario is ruled out in this case, because the scenario is adjusted dynamically with every change in the forecast, so a deviation from plan would not be meaningful.
In such a case, a static plan can be created, e.g. as of May 2024, and agreed with the bank. Once the plan has been approved and the loan granted, COMMITLY lets you commit this plan. This fixes the plan so that it can no longer be changed, and it can then be used for all reporting to the financing partner. The ability to continuously adjust the rolling forecast to new information and changes remains unaffected.
In case 2.2, ongoing reporting as part of an agreement, you can create a 12-month PLAN report and provide it to the bank. In such cases, deviation analyses are also often created and submitted in addition.