Blog · Forecast and pipeline · Finance and FP&A teams
Cash positioning establishes the cash a company holds and can use at a specific cutoff. Cash forecasting projects future balances from that opening position, with a worked reconciliation of bank balances, restrictions, temporary holds and scheduled flows.
Cash positioning and forecasting answer two connected questions: how much cash can the company use now, and how much will it have later? The position starts with balances at a specific cutoff; the forecast starts with a reconciled opening balance and adds expected receipts and payments. A reliable bridge explains why bank cash, usable cash and opening forecast cash may be different amounts.
A cash position identifies balances by account, legal entity and currency, then shows what is available for the decision being made. A forecast estimates how those balances will change over future dates. Neither a large group balance nor an expected collection proves that a payment account is funded today.
The Association for Financial Professionals' liquidity guidance emphasizes both the location of cash and restrictions on access. That is the practical distinction: having cash recorded somewhere and having cash available for a specific obligation are separate facts.
| Question | Cash positioning | Cash forecasting |
|---|---|---|
| What is measured? | Balances and availability at a cutoff | Expected balances over future dates |
| Main inputs | Bank balances, holds, restrictions and reconciliation items | Opening cash, collections, disbursements and dated assumptions |
| Status of the inputs | Observed balances, with settlement status identified | Expected flows, with confidence and timing documented |
| Main decision | Fund today's payments or move an available surplus | Arrange future funding or identify expected surplus periods |
| Main check | Each account ties to its source balance | Opening plus net movements equals closing cash |
Use the existing cash flow forecast walkthrough for the monthly build. The work here is establishing what its opening balance represents and proving the connection to the current position.
Take a fictional US distributor, Meridian Supply, at the close of September 30, 2026. Every account below belongs to the same legal entity and is denominated in USD. The company has no overdrafts, and the bank balances have been reconciled to its cash records.
The bank has placed a temporary hold on existing funds in the operating account. That hold does not overlap with the debt reserve restriction. No unsettled deposits are included in the balances, and the amounts below contain no undrawn borrowing facilities.
| Account | Closing bank cash (USD) | Temporary hold (USD) | Restricted cash (USD) | Usable at cutoff (USD) |
|---|---|---|---|---|
| Operating | 420,000 | 40,000 | 0 | 380,000 |
| Collections | 180,000 | 0 | 0 | 180,000 |
| Debt reserve | 90,000 | 0 | 90,000 | 0 |
| Total | 690,000 | 40,000 | 90,000 | 560,000 |
For each row, usable cash equals closing bank cash minus the hold minus restricted cash. Therefore, $690,000 minus $40,000 minus $90,000 gives $560,000 usable at the cutoff. All figures in this example are whole dollars; no rounding is needed.
Retain the balance date, source file, account identifier, legal owner and restriction explanation beside each row. If a bank's available balance already deducts a hold, do not deduct that hold again. The table starts from closing bank cash precisely so its adjustments are visible.
Meridian's October forecast measures unrestricted cash balances. Its opening amount is $690,000 minus the $90,000 debt reserve, or $600,000. The temporary hold remains part of that cash balance, although it cannot fund a payment at the cutoff.
That creates an explained difference: opening forecast cash is $600,000, while usable cash is $560,000. The $40,000 gap is entirely the temporary hold. No balancing plug is required.
Keep the financial reporting reconciliation separate from this operational definition. FASB's restricted-cash update explains that the statement of cash flows reconciles the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. That presentation does not establish spending availability. Meridian's operating forecast explicitly excludes its restricted reserve and retains it in a separate reconciliation.
The opening controls are:
Total bank cash = Unrestricted opening cash + Restricted reserve
Unrestricted opening cash = Usable cash at cutoff + Temporary hold
Here, $690,000 equals $600,000 plus $90,000, and $600,000 equals $560,000 plus $40,000. Every account appears once in each applicable view.
Treasury has confirmation that the temporary hold will release on October 2. October's collections schedule contains $1,020,000 of expected customer receipts. The payment schedules contain the outflows below. No other hold or restriction changes are assumed.
| October bridge | Change in unrestricted cash (USD) | Change in usable cash (USD) |
|---|---|---|
| Opening amount | 600,000 | 560,000 |
| Expected customer receipts | 1,020,000 | 1,020,000 |
| Supplier payments | -610,000 | -610,000 |
| Payroll funding | -260,000 | -260,000 |
| Tax payments | -90,000 | -90,000 |
| Capital purchases | -80,000 | -80,000 |
| Temporary hold releases | 0 | 40,000 |
| Expected closing amount | 580,000 | 580,000 |
Payments total $610,000 + $260,000 + $90,000 + $80,000 = $1,040,000. Net external cash flow is $1,020,000 minus $1,040,000, or negative $20,000. The unrestricted balance closes at $600,000 minus $20,000 = $580,000.
The availability bridge reaches the same figure: $560,000 opening usable cash plus the $40,000 hold release minus $20,000 net outflow equals $580,000. Releasing a hold increases availability; it is not a new receipt. Total expected bank cash, including the unchanged reserve, is $580,000 + $90,000 = $670,000, also equal to $690,000 minus $20,000.
If the hold remains in place, unrestricted closing cash stays $580,000 but usable closing cash becomes $580,000 minus $40,000 = $540,000. This changes the payment decision without changing the balance forecast.
Use the current position before releasing payments or making transfers. Check settlement timing against the bank's own requirements; the Federal Reserve publishes Fedwire operating hours and cutoff times, so a planned wire should not be treated as timing-free access to cash.
Use the forecast to identify future funding dates. A positive month-end balance can still contain a shortage before collections arrive. Put dated flows into the 13-week cash flow layout when weekly liquidity matters, with daily detail around large payment dates.
When several entities are involved, treasury cash forecasting adds intercompany matching and entity-level funding checks. The distinction matters even if every account uses USD.
Bring your bank balance summary, restriction register and dated receipts and payments schedule; Covirage maps the uploaded columns, and its tools compute the opening bridge and check the cash movement totals. The external AI model explains the differences with every figure traced to its rows. Create a free Covirage account and bring a sample of your own data.
See Covirage for FP&A reporting for the supporting reporting context.
A bank balance is an input to the position. Treasury must also identify the account owner, currency, restrictions, temporary holds and settlement status. A total across accounts can overstate what a particular entity can use for payments at that moment.
Track it explicitly, either in a separate schedule or in a total-cash view with an availability bridge. Do not include restricted money in operating funding capacity unless its permitted use supports the payment. The opening and closing balances must use the same definition.
A forecast may start with settled cash balances while the bank's available balance also reflects temporary holds. Differences can also come from account scope or cutoff timing. Explain each difference by account and item instead of entering an unexplained opening adjustment.
Update it when needed for payment and funding decisions, including after material receipts, disbursements or transfers. Record the cutoff each time. Refresh the forecast when timing assumptions change, while retaining the submitted version for comparison with actual settlements.