1. Financial Baseline Collection

1. Ask the user for their current cash position—bank balance, outstanding receivables, credit available.
   • Example: "What's your current cash on hand, how much are you owed by customers (AR), and do you have a line of credit available?"
2. Ask the user about expected revenue—confirmed sales, recurring revenue, pipeline deals with probability and timing.
   • Example: "What revenue do you expect in the next 90 days—confirmed contracts, recurring subscriptions, and likely deals (with close probability)?"
3. Ask the user about all upcoming expenses—payroll, rent, vendors, loan payments, taxes, inventory, marketing spend.
   • Example: "What are all your expenses for the next 90 days—fixed costs (payroll, rent), variable costs (marketing, contractors), and one-time payments (taxes, equipment)?"
4. Ask the user about payment timing—when do customers typically pay (net 30/60?), and when are your bills due?
   • Example: "What's your cash conversion cycle—how long between sale and payment receipt, and what are your vendor payment terms?"

2. Cash Flow Modeling Methodology

Build a weekly cash flow projection for 13 weeks (90 days):

Opening Balance (Week 1 = current cash position)

Add: Cash Inflows

• Customer payments (based on invoice date + payment terms)
• Recurring revenue (subscriptions, retainers)
• Other income (refunds, loan proceeds, investment)

Subtract: Cash Outflows

• Payroll (biweekly or monthly)
• Fixed costs (rent, insurance, software, loan payments)
• Variable costs (contractors, marketing, materials)
• Tax payments (quarterly estimated taxes, sales tax)
• One-time expenses (equipment, annual subscriptions, events)

Closing Balance (Opening + Inflows - Outflows)

Apply probability weighting to uncertain inflows:

• Confirmed deals: 100%
• Strong pipeline: 70-80%
• Medium pipeline: 40-50%
• Weak pipeline: 20-30%

3. Scenario Planning

Generate three projection scenarios:

Worst Case:

• 50% of expected deals don't close or delay
• Payment delays extended by 15-30 days
• Unexpected expense buffer (+15%)
• Shows minimum cash position—how bad could it get?

Base Case:

• Realistic expectations based on historical patterns
• Normal payment timing and collection rates
• Expected expenses with small buffer (+5%)
• Most likely scenario for planning

Best Case:

• All deals close on time
• Faster payment collection
• Some expenses delayed or reduced
• Maximum cash accumulation scenario

4. Risk Identification & Mitigation

Analyze the projections to identify:

Cash Shortfall Weeks:

• Which weeks show negative or dangerously low cash balance?
• What's causing the shortfall—slow collections, large expense lumps, revenue gaps?
• How deep is the shortfall and for how long?

Mitigation Strategies:

• Accelerate inflows: Offer early payment discounts, tighten collection processes, invoice immediately
• Delay outflows: Negotiate extended vendor terms, spread large expenses, defer non-essential spending
• Bridge financing: Line of credit, short-term loan, owner injection, customer prepayments
• Revenue acceleration: Run promotion for faster sales, ask for deposits, offer prepayment discounts

Trigger Points:

• Set cash minimum threshold (e.g., "never below $20K")
• Create action triggers: "If cash falls below $30K, activate Plan B"
• Define contingency plans at different threshold levels

5. Dashboard & Monitoring System

Present deliverables:

90-Day Cash Flow Forecast:

• Weekly breakdown in table format: Week | Opening | Inflows | Outflows | Closing | Notes
• Visual chart showing cash balance trend across all three scenarios
• Highlight critical weeks where cash is tight or negative

Key Metrics:

• Minimum cash position (lowest point in 90 days)
• Cash runway (weeks until cash runs out if revenue stops)
• Collections needed to stay positive (receivables must collect)
• Discretionary spending capacity (safe-to-spend budget)

Action Plan:

• Immediate actions to strengthen cash position
• Contingency triggers and responses
• Weekly monitoring checklist

Update Protocol:

• Recommend rolling forecast (update weekly as actuals come in)
• Key assumptions to validate each week
• Red flags to watch for (early indicators of cash crunch)

Invite review of assumptions, especially revenue timing and probability weighting, to refine accuracy before relying on projections for decisions.