A cash flow is a flow of funds over a period according to an adjustable curve. Invantive Estate determines cash flows in two parts: two parts: - Determining the historical cash flows. - Determining the future cash flows. ## Cash Flows at All Levels A cash flow projection can be defined at all levels: - Contract, for example the supplying of a steel construction by the firm Derikx. - Cost category, for example all steel work within a project. - Roll up, for example all consultancy within a project. - Master roll up, for example all costs within a project. - Independent or sub-project, for example a full building lease project. - Master project, for example a combination of a land and two building lease projects. - Legal entity, for example all projects of the SPV "Projects South". - Company wide, namely all projects within the system. Cross sections are possible at all levels, for example all cash flows of a supplier or all cash flows for projects of a developer. ## Historical Cash Flows The historical cash flows consist of realised cash flows. A cash flow is realised when an entry in the general ledger has led to an actual cash flow, being a payment or a receipt. Only postings (invoices) that are paid or received count as a historical cash flow. ## Future Cash Flows The volume of the future cash flows is the difference between the prognosis end of work and the historical cash flows. As a result, the cash flow projections always match the prognosis end of work when an automatic system determines the cash flow. Invantive Estate uses the [[Invantive Estate/Subjects/Advanced/Cash Flow Projection Methods|Cash Flow Projection Method]] to determine when a cash flow occurs. The most common cash flow projection is "automatic worst case". Other cash flow projection methods require manual input. Some are a variation on "automatic worst case" that varies the cash flows in time based on project-specific risk variables. Others project sales in time instead of cash flows. ## Automatic Worst Case The automatic worst case approach gives a realistic cash flow projection in almost all situations, for projects in various stages of development: - A first concept with a budget outline and a schedule outline. - A tangible development plan with a budget for each cost category and a schedule for each activity. - A project in its implementation phase, where part of the activities are already completed while others are carried out. - A project in its final stage. Depending on the available information, the approach chooses the most detailed planning of the cash flows possible. It uses the following levels, in descending degree of detail: - Entering in the general ledger (invoices) - Revenues (sold and unsold) and orders - Contract budgets - Budget - Cost type - Project The levels contain period information, such as the planned start and completion date of a project or the actual start date of a project. The approach always uses the period information as accurately as possible. Every level defines a start and end date for the cash flow. The approach always uses these dates when they are entered. A curve divides the volume between the prognosis end of work and the historical cash flows over the period. Some common curves are included by default, for example for land and building lease. The desired curve shape can be specified at almost all levels. Normally, the [[Invantive Estate/Subjects/Administration/Cost Categories|cost category]] or the [[Invantive Estate/Subjects/Finance/Budgets|budget]] defines the curve. If necessary, the curve can also be set at detail level. Private curves are possible. A private curve is a list of sampling points on the curve, entered in [[Invantive Estate/Subjects/Advanced/Codes|Codes]]. The curve values must lie in the range from 0 (0%, no cash flow) to 1,000,000 (100%, fully realised cash flow). The number of sampling points can vary as desired. It is usually a balance between computing time, storage space and precision. In practice, more than 30 sampling points add little extra detail. Contact the vendor of Invantive Estate before adding a private curve.