What is cash flow modeling?

Answer 1

This is soiftware that better enables a company to keep a good record of intake and outflow of cash.
Your cash flow model is the most important financial statement that you have. Done correctly, it provides your business with the necessary checks, balances, and financial controls to guide performance; wins bankers' hearts; and keeps spending and investment impulses in check. Developing a cash model is simple, and when created with solid sales and expense forecasts in mind, you can feel comfortable that you have a solid pulse on the life blood of your business.

Answer 2

Simple version: common in Actuarial related professions.

Taking past trends of money in money out, projecting using estimates, deducting notional accounting numbers, adjusted for market and industrial factors, discounted to the present day money values. Then bench mark it against company, industry and market ideals, monitoring and correcting negative deviations to ensure the model is as close as operationally possible.

Alternatively, reverse the analysis process, start with an optimum cash in cash out plan that is a standard in industry, work backwards to what the company can afford/save in cash.
Use various other behaviour models to introduce deviations to the ideal cash in cash out plan, to see where corrective actions may be required and where negative trends cannot be avoided but hedged.

Answer 3

two points