chapter  13
10 Pages

CASH FLOW FORECASTING

A forecast of cash collections and potential write-offs of accounts receivable is essential in cash budgeting and in judging the appropriateness of current credit and discount policies. The critical step in making such a forecast is estimating the cash collection and bad debt percentages to be applied to sales or accounts receivable balances. This chapter discusses several methods of estimating cash collection rates (or payment proportions) and illustrates how these rates are used for cash budgeting purposes.