The challenge
When cashflow sits as a separate document it becomes static, and far less useful for planning than when it is built into the management pack. The forecast was updated manually each month, with inputs and outputs keyed in by hand. That meant the management team could not see how changes made after re-forecasting, especially new hires and promotions, would affect the company's cash position. They were making hiring decisions blind, without understanding the impact further down the line.
- Cashflow held as a standalone document, updated manually each month.
- No link between staffing decisions and the forecast, so changes weren't reflected in cash.
- Management needed to see, in real time, how new hires and promotions affected cash.
- Pay and hiring decisions were being made without visibility of the longer-term cash impact.
My approach
Agreed what the staffing sheet needed to capture
I started by defining, with the management team, what the staffing sheet had to include: a list of current employees, the ability to add potential hires, and control over future monthly pay for everyone, both existing and prospective. We also agreed separate sections for recruitment fees and bonuses, each of which could be phased into the month it was expected.
Mapped the staffing sheet to the P&L
Once the staffing sheet was signed off, I mapped it to the P&L forecast so it updated automatically. Every change to the sheet flowed straight through to the forecast staff cost accounts, salaries, NI, pensions and recruitment costs, with no manual re-keying.
Linked the P&L through to cashflow
I then linked the staff costs on the P&L to the overheads section of the cashflow, so every staffing change was reflected in the correct month. Staffing, P&L and cashflow now moved together as one connected model rather than three documents updated by hand.
The results
- Real scenario planning, letting the management team test how new hires and internal pay rises would affect cashflow over the long term.
- Better hiring and pay decisions, with a clear view of whether the business could afford a new hire or a pay increase, and when it could take effect.
- Cashflow built into the management pack, so the forecast stayed live and useful for planning rather than sitting on the side as a static document.
When cashflow is integrated into the management pack rather than sitting alongside it, every people decision can be tested against cash before it's made.