A 3-Way Forecast is an integrated set of reports consisting of a Profit & Loss, Balance Sheet and Cashflow forecasts. These are separate reports in Calxa, but they all tie in together and balance based on the settings provided.
Banks require a 3-Way Forecast for loan applications, and they commonly request updated quarterly and sometimes monthly reports for risk management purposes. The forecast isn't just for your bank, however. It should be an key part of your planning to build a picture of what will be happening in your business in the coming years.
Your forecast will only be as good as the assumptions, settings and budgets that go into it, so it is worth taking the time to get it right. It's also important to review the forecast frequently and update it when needed to better reflect what you expect to see in the future.
Budget and Settings
A good portion of your Cashflow and Balance Sheet Forecast is calculated for you in Calxa by using your Profit & Loss budget and the account and timing selections you make in Financial Settings for taxes like GST/VAT, PAYG and employee liabilities.
Calxa takes the hard work out of predicting the timing of payments and receipts by analysing your current average Creditor Days and Debtor Days. You can then just add any other Balance Sheet budgets required (i.e. asset purchases, loan repayments) and your 3-Way Forecast will be ready to go.
Click on the links below for information on how to create your:
Bundle the 3-Way Forecast Reports
Use Calxa's pre-configured bundle kit called 3-Way Forecast to create your integrated reports. The Create a Bundle help note provides instructions.
Each of the reports also has longer date ranges available using other templates, up to 10 years annually.
The starting date for each report is set as Relative +1 to give you an integrated 3-way forecast for the future whenever you run it (P&L, Balance Sheet, Cashflow Forecast).
The Bank Movement (12 Months) report begins from FY Start 1 and includes actuals YTD, with forecast for the remaining months.
This report has a similar layout to the Cashflow Forecast but displays your P&L accounts at the budgeted accrual amounts, it does not adjust for timing differences or gross figures up for GST/VAT. The timing differences and GST/VAT are reflected in the Balance Sheet section of the report in Trade Debtors, Trade Creditors, and GST Paid/Collected. The other main difference between this report and the Cashflow Forecast report is that this report will include non-cash items such as depreciation.
For those who prefer visuals, this bundle also includes the following charts: Cashflow Forecast, Balance Sheet Forecast and Net Profit Forecast.
Review and Revise
Expertise in cashflow forecasting comes with time and practice. The more often you forecast, the better you will become. The more familiar you are with the projections for your organisation, the more likely you will be to recognise anything odd or unusual.
Use the Budget Discrepancy Analysis report with the By Debits/Credits template variant to check that your budget balances.
Test your cashflow forecast for reasonableness. Does it meet your expectations? If it doesn't, consider whether you need to revise your budget or adjust the Financial or Cashflow Settings.
To understand any unexpected values in your cashflow forecast or Balance Sheet, please refer to the Understanding and Troubleshooting Cashflow help note.
Using Budget Versions, you can modify your budget as the year goes on and the world around you changes. You can model different scenarios and examine their cashflow effect before committing to major new decisions.
Compare two cashflow scenarios using the Cashflow Scenarios Line Chart template. A sample version of this chart is attached at the bottom of this help note.