Invantive VisionA cash flow is a flow of funds over a period according to an (adjustable) curve.
The determination of the cash flows in Invantive Vision is divided in two parts:
•determining the historical cash flows, and
•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 realized cash flows. A cash flow is achieved when an entry in the general ledger has actually led to a cash flow (payment or receipt). Only postings (invoices) that are paid or received are included 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. This will ensure that the cash flow projections always match with the prognosis end work when using an automatic system for the determination of the cash flow.
Invantive Vision determines using the expandableCash Flow Projection Method when a cash flow will occur.
The most common cash flow projection is ‘automatic worst case’. Other cash flow projection methods require manual input or are a variation on ‘automatic worst case’ by varying the cash flows in time based upon project specific risk variables or by projecting sales instead of cash flows in time.
Automatic Worst Case
The automatic worst case approach yields in almost all situations a realistic cash flow projection for projects in various stages of development:
•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.
The automatically worst case approach chooses depending on the available information, an as detailed as possible planning of the cash flows. In descending degree of detail the following levels are used:
•Entering in general ledger (invoices)
•Revenues (sold / unsold) and orders
•Contract Budgets
•Budget
•Cost Type
•Project
At these levels period information is available, such as the planned start and completion date of a project, or the actual start date of a project. The automatic worst case approach will always use period information as accurately as possible. At all levels always a start and end date for the cash flow are defined. This will always be used when entered.
The volume between the prognosis end of work and the historical cash flows is divided over the period by a curve. By default, some common curves are included, for example, for land and building lease. The desired curve shape can be specified at almost all levels. Normally, the curves are defined by thecost category or by the budget. But if necessary, the curve can also be set at detail level.
Private curves can be used by entering a list of sampling points on the curve values into Codes. The curve values must lie in the range of 0 (0%, no cash flow) to 1,000,000 (100%, fully realized cash flow). The number of sampling points in the curves can be varied as desired and is usually a balance between computing time, storage space and precision. In practice, more than 30 sampling points do not add much extra details. Before adding your private curve first contact the vendor of Invantive Vision.
