How do you balance accuracy and simplicity in cash flow forecasting models?
Cash flow forecasting is a vital skill for working capital management, as it helps you plan your liquidity needs, optimize your cash utilization, and avoid cash shortages or surpluses. However, cash flow forecasting can also be challenging, as it involves making assumptions and estimates about uncertain future events, such as sales, costs, payments, and receipts. How do you balance accuracy and simplicity in cash flow forecasting models, without compromising your decision-making or wasting your time and resources? Here are some tips to help you find the optimal level of complexity and precision for your cash flow forecasting models.