Cash Flow Forecasting & Liquidity Management

1. Goal: From "Rearview Mirror" to "Headlights"

Problem: Accounting tells you what happened yesterday. Treasury needs to know if we can make payroll next Friday. Most companies manage this in fragile Excel models that disconnect from real-time AP data. Solution: A live, predictive cash flow layer built directly on top of the Approved AP & Recurring Contracts data.

2. Core Value Proposition

• Precision: Uses actual invoice due dates and payment terms, not just averages.
• Speed: Updates instantly when an invoice is approved or a payment run is scheduled.
• Safety: Alerting when projected balance dips below minimum liquidity buffers.

3. Data Model

CashFlowProjections

• projection_date: Date being forecasted.
• currency
• inflow_forecast: Expected AR (based on DSO - Days Sales Outstanding).
• outflow_committed: Approved AP (Hard liability).
• outflow_predicted: Recurring contracts not yet invoiced (Soft liability).
• projected_balance: Opening Balance + In - Out.
• confidence_interval: High (Approved) vs Low (Predicted).

LiquidityEvent

• event_id
• source_type: INVOICE | PAYMENT_RUN | RECURRING_CONTRACT | MANUAL_ADJUSTMENT
• source_id: Link to the Invoice/Contract.
• effective_date
• amount
• probability: 0.0 - 1.0 (e.g. Approved = 1.0, Draft = 0.5).

4. Key Logic & Engines

4.1 The Payment Behavior Model

• Don't trust the Due Date.
• Logic: "Vendor X usually allows us to pay 5 days late." OR "We pay Vendor Y on the 15th of every month regardless of invoice date."
• Output: expected_cash_out_date (Adjusted reality) vs due_date (Legal).

4.2 Recurring Liability Prediction

• Logic: "We have a contract with AWS for ~$50k/month. We haven't received the invoice for May yet, but we know it's coming."
• Action: Insert a LiquidityEvent placeholder to reserve cash, preventing "Surprise! $50k bill."

5. UX/UI: The Treasury Dashboard

• The "Runway" Graph: Line chart of Daily Cash Balance for next 30/60/90 days.
• The "Cliff" Alert: Red marker on the timeline: "Projected Breach of $1M buffer on Nov 14th."
• Scenario Planner:
  • "What if we delay the $200k Marketing payment by 1 week?" -> Drag and drop bars to see impact on the curve.

6. Integration

• Inputs: AP Data, Contract Data, Bank Balances (via PSD2/Plaid).
• Outputs: "Cash Requirement" report for the Treasurer.