13-Week Cash Flow Forecasting
Where the Sun Don’t Shine (…Yet)
Perhaps not exactly a crystal ball, but a 13-week liquidity forecast provides fund sponsors with the next best thing to cash flow omniscience. This diagnostic uncovers flows in working capital and short-term debt needs offering critical (and missing) clarity into both the sources and uses of cash. It’s step one sunshine – showering light on the shadowy reasons for underperformance (or for any other state of being off-plan). At Accordion, we stitch together the capital threads from disparate/sub-par reporting systems to identify a company’s potential trapped value, from which sponsors and management can then create effective and targeted value creation plans. (In English: See the problem, fix the problem.)
Our Approach to 13-Week Liquidity Forecasting
The Three R’s
Rudderless, random and reactive. The 3 dreaded Rs of a performance improvement plan. Accordion’s 13-week liquidity forecasting exercise removes the Rs from the equation by providing the fund sponsor with a thorough understanding of cash sources and uses from which to create an informed, targeted and purposeful improvement plan.
Small Details, Big Picture
Identifying the current state of operational liquidity means a focus on line item details: cash receipts, payroll and taxes, operating expenses, note/lease payments, accounts payable, etc. At Accordion, we investigate these individual flows, weaving together disparate information and reporting systems to create a complete and holistic working capital fabric.
Limited liquidity visibility makes managing cash flow at the detailed level required by PE investors challenging. Moreover, it makes identifying the drivers contributing to underperformance nearly impossible. Our approach, on the other hand, provides quick, but detailed, data clarity around the sources and uses of cash, while simultaneously improving forecasting processes and accuracy. We help management see what had before been invisible, or at least, hiding.
A 13-week liquidity forecast provides diagnostic clarity. By leveraging Accordion’s unique marriage of financial operating and technical expertise, our people use that diagnostic to first identify, and then help unlock trapped value. We quickly illuminate the underlying drivers of underperformance in the business and create a plan to rectify, rehabilitate and restore.
A detailed rolling forecast focused exclusively on cash flows provides management with the up-to-date information necessary to stay ahead of potential liquidity concerns.”