The Secret CFO

Intra‑month Cash Peaks Demand Daily Forecasting, Not Month‑end

Most cash and capital planning/forecasting is anchored to a monthly or quarterly level. Models built to month ends, using historical data closed at month ends. All ignoring the intra-month volatility. The implicit assumption, if you don't model it, is that your working capital need is greatest at month end. For many businesses, that simply isn't true. The peak might be on the 15th. Or the 22nd, or any other day you can choose. It depends entirely on when the big payments land relative to when the collections arrive. And the earlier in the month it lands, the harder it is to deal with. Yes, it might be only a few days here and there. But if it's happening every single month, it's a permanent capital draw that you haven't built into your funding structure. The bars are the individual cash receipts and payments by day. The red line is the cumulative cashflow for the month, which as you’ll see here is negative for the whole month until the final day, peaking at working day 15. Assuming this is repeatable, this is a real funding requirement for the business (vs a model built to month ends). I would hazard to say that most long-term capital/cashflow forecast models I see do not account for this properly. And when I see a business in serious cash pain, it’s one of the first things I look for. In yesterday's Playbook, I broke this down in detail, and how you should adjust for it in your forecasting and funding structure. You can read it here: https://t.co/UXBvb1Bysx