Test one cash risk before changing ten assumptions

The worst-case sheet has become impossible to explain

Suppose a business changes customer payments, labour costs, sales and supplier dates all at once in a “worst case” forecast. The result is a large shortage, but nobody can tell which change drives it or what decision would help.

Begin with one question that matters now. For example: what happens if the largest expected receipt arrives a week later than currently planned?

Keep the original view intact

Use a copy or a clearly separated scenario area. Record the assumption being changed and leave unrelated inputs alone for this first test. That makes the difference easier to interpret.

Check that the opening balance and existing commitments are the same. Otherwise an accidental change in the starting position can be mistaken for the effect of the delayed receipt.

Move the receipt rather than deleting or duplicating it

Place the expected amount in the later period and remove it from the original period in the scenario. Recalculate subsequent balances. If only the date changes, the eventual total receipt should remain the same.

business.gov.au calculates closing cash from opening cash plus incoming money less outgoing payments. The scenario uses that same calculation with one explicitly changed timing assumption.

Source: business.gov.au: Set up a cash flow statement

Identify the first affected commitment

Find the earliest point where the changed timing creates a problem. Name the payment and the shortfall, rather than reporting only the lowest balance at the end of the forecast.

Discuss possible responses with the relevant adviser and parties. Do not assume a contractual payment can be delayed, or that further borrowing is available, simply because either would make the scenario balance.

Set a trigger for reviewing the response

Choose an observable event, such as the customer failing to confirm the expected payment by a specified review date. Identify who checks it and who needs to know if the assumption weakens.

The trigger is an internal planning prompt, not a new legal deadline for the customer. Keep contractual rights, formal notices and any actual response periods separate and obtain advice where they matter.

Add complexity only when it answers another question

After understanding the first test, assess a second relevant risk if needed. Keep the assumptions named so a combined scenario does not become an unexplained number.

Bring the base view, changed assumption and proposed response to CRP if the forecast exposes broader business pressure. A scenario cannot predict what the customer will do. It can show which decision deserves attention before a late payment turns into an immediate crisis.