When you and your management want to be confident about your cash position. When you want your business to be attractive to potential investors and lenders. When you want to bring financial stability to your company, now and in the future.
What is a three-way forecast?
A three-way forecast, also known as the 3 financial statements is a financial model combining three key reports into one consolidated forecast. It links your Profit & Loss (income statement), balance sheet and cashflow projections together so you can forecast your future cash position and financial health.
Because your cashflow forecast is driven by the real-time data in your balance sheet and profit and loss statements, the report has accounting integrity. For this reason, a three-way forecast is also beneficial for banks and investors.
In addition to providing granular financial forecasts that explain the future prospects of your business model, three-way forecasts are accurate, robust and provide the best possible insights for your future financial position.
Why is three-way forecasting important for a business?
A three-way forecast is important for a business as it highlights future financial situations enabling you to ensure that the businesscan afford to pay suppliers and employees.
What is a 3-Statement Model? The 3-Statement Model is an integrated model used to forecast the income statement, balance sheet, and cash flow statement of a company for purposes of projecting its forward-looking financial performance.
A 'three-way' is a combination of cash flow, profit and loss, and balance sheet forecasts all integrated into one spreadsheet. Banks and all other providers of finance are increasingly requiring these from businesses before granting them finance.
Think of it more as a way to create a plan to spend your money on things that matter to you. Get started in three easy steps — paycheck, prioritize and plan.
To keep your cash flow projections on track, create a rolling 12-month plan that you update at the end of each month. If you add a new month to the end every time a month is completed, you'll always have a long-term grasp of your business's financial health.
For example, a “3+9” RF, uses 3 months' actual data and 9 months' forecasted data. Any rolling forecast planning process requires revisions to accommodate the latest strategy decisions from a top-down approach. The rolling forecast is prepared regularly throughout the year to reflect changes in the industry or economy.
Introduction: My name is Arline Emard IV, I am a cheerful, gorgeous, colorful, joyous, excited, super, inquisitive person who loves writing and wants to share my knowledge and understanding with you.
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