Profit does not pay payroll: give cash a calendar

Profit and cash answer different questions. IAS 7 distinguishes cash flows and provides for non-cash and timing adjustments when relating them to profit or loss.

For operational monitoring, start with a verified available balance at a cut-off date and a calendar of receipts and payments. A forward-looking forecast serves a different purpose from a historical statement of cash flows. Do not present one as the other, or an expected receipt as cash already available.

Choose a frequency that fits the decisions ahead. If upcoming payments matter, a monthly summary may conceal the sequence within the month. The horizon should reveal relevant obligations without pretending distant dates are precise. State which accounts are included and how restricted balances or transfers between accounts are treated to avoid counting them twice.

For each expected receipt, keep the source, responsible person, expected date and assumption supporting that date. For payments, distinguish contractual due date, expected operational date and authorization status. A customer’s usual payment day is not a payment confirmation. Keep the distinction even when it makes the table slightly less tidy.

Try three evidence groups: completed movements, documented commitments and estimates. These are working labels, not calculated probabilities. If a date has no supporting basis, leave it pending and assign a follow-up. Pushing it into the last week to make the forecast balance produces a comfortable spreadsheet and an uncomfortable surprise.

A scenario should change identifiable assumptions: a collection delay, a purchase schedule or the timing of a drawdown. Retain the same starting basis and document the change. Two versions with different coverage, different opening balances and hidden assumptions cannot isolate what drove the difference.

At each review, replace elapsed periods with verified movements and retain the forecast previously used. Compare expected with actual: did the amount change, did the date move or was a movement missing? This is a simple proposed learning framework, not proof of an underlying cause.

Ask the owner for evidence supporting the explanation. Record the next action and review date. Compare the calculated closing balance with the available balance at the next cut-off as well. Resolve differences before extending the calendar. Adding weeks will not repair an incorrect starting point.

Focus on receipts still awaiting confirmation, payments needing an authorized decision and assumptions changed since the last review. Avoid compressing everything into a traffic light: a colour cannot show who needs to call, which document is missing or when to check again.

Financing choices, payment priorities and the use of reserves depend on contracts, restrictions and context. The calendar organizes evidence for the people responsible; it does not replace their judgment. A useful meeting produces assigned decisions and checks, not a number presented as a guarantee.