Setting Up Cash Outflow Driver Assumptions for Driver-Based Planning

Set up the assumptions for cash outflow drivers for driver-based planning.

Depending on how your administrator enabled the application, cash outflow drivers, along with their associated calculations and sample line items, are included in the application. Cash forecasts for each line item are calculated based on the assumptions you define, applied to the driver input.

Note:

These steps assume that cash Driver Input data has already been loaded, but you can enter or adjust Assumptions values or period values.

From the Home page, click Daily Cash Forecast, and then click the Drivers - Cash Outflow tab. Depending on what your administrator enabled for the application, you'll see a dashboard for each driver method that was enabled, along with some sample line items.

The dashboard provides a consolidated view of Driver Assumptions and Cashflow in a consolidated view.

If you are forecasting at the periodic level, from the Home page, click Periodic Cash Forecast.
For each cash outflow category, described in the following steps, select the appropriate members in the POV, and then enter the driver assumptions. Save the dashboard after entering assumptions, which triggers driver calculations for each of the driver categories and calculates cash outflow.
For Expense Payments—Click Expense Payments.
1. Set up the expense pay term assumptions by entity, line item, and other custom dimensions in the Assumptions form.
2. For each line item, enter up to five Pay Terms and the Percentage and Due Period for each.
3. Review, adjust, or manually enter the expense payments (the Driver Input).
The cash outflow is calculated by applying the pay term percentage on the driver input and posting the cash outflow to the period buckets based on the due date.
For Fixed Asset payments—Click Fixed Asset Payments.
1. Set up the fixed asset pay term assumptions by entity, line item, and other custom dimensions in the Assumptions form.
2. For each line item, enter up to five Pay Terms and the Percentage and Due Period for each.
3. Review, adjust, or manually enter the fixed asset payments (the Driver Input).
The cash outflow is calculated by applying the pay term percentage on the driver input and posting the cash outflow to the period buckets based on the due date.
For Recurring payments—Click Recurring Payments.
1. Set up the recurring pay term assumptions by entity, line item, and other custom dimensions in the Assumptions form.
2. For each line item, enter the Pay Basis (Annual, Monthly, or Weekly), Pay Period (the starting period from when recurring payments should begin), Recurring Frequency (the recurring frequency, for example, every 2 years, months, or weeks, based on the Pay Basis), and the Number of Occurrences (the number of recurring payments to be posted).
3. Review, adjust, or manually enter the recurring payments (the Driver Input).
4. In the Assumptions column, review, enter, or adjust the total recurring payment amount in the Cash Drivers row for each line item.
Cash outflow is calculated based on the recurring schedule that is defined which is by a combination of pay basis, pay period (starting period), recurring frequency and number of occurrence, applying the amount defined in the Assumption column. It posts accordingly through the end of your forecast range.
For Salary payments—Click Salary Payments.
1. Set up the salary pay term assumptions by entity, line item, and other custom dimensions in the Assumptions form.
2. For each line item, select the Salary Basis (Annually or Monthly) and the Salary Incidence (when the salary is posted and the cash flow occurs—End Period, Begin Period, Semi-monthly, or Biweekly). Enter the Annual Payment Due Date (only for line items where Salary Basis is Annual, the salary due date), and optionally, up to five pay terms and the Percentage and Due Period for each.
3. Review, adjust, or manually enter the salary payments (the Driver Input).
4. Optionally, in the Assumptions column, review, enter, or adjust the total (for example, annual) salary payment amount. It will be divided by the number of periods and posted to appropriate periods.
  Any values you enter in the periods are cumulative to the value in Assumptions.
Cash outflow is calculated based on salary basis and posted to respective periods based on salary incidence, due date, and pay terms.
For Project payments—Click Project Payments.
1. Set up the project pay term assumptions by entity, line item, and other custom dimensions in the Assumptions form.
2. For each line item, enter the Percentage and Due Date for up to three project milestones (for all projects or for a specific project), and the Percentage and Due Period for up to five Pay Terms.
3. Optionally, in the Assumptions column, review, enter, or adjust the total project payment amount. It is divided by the number of periods and posted to appropriate periods.
4. Review, adjust, or manually enter the project payments (the Driver Input).
Cash flow is calculated applying the pay term on the milestone amount for the project. Milestone amounts are derived on milestone percentage for each project. The drivers are captured by project and the cash flow is calculated on the project.

Tip:

You can see information about any of the projects on the dashboard. In the Assumptions form, right-click a project and then select Apply Context. The Cashflow grid and chart are updated to reflect the selected project.

You can view information at the All Project level. In the Cashflow grid or chart, click the drop-down Project list and select All Project.
For Direct Tax payments—Click Direct Tax Payments.
1. Set up the direct tax pay term assumptions by entity, line item, and other custom dimensions in the Assumptions form.
2. For each line item, enter the Percentage and Due Date for up to four tax installments.
3. Review, adjust, or manually enter the direct tax payments (the Driver Input).
Cash outflow is calculated based on the annual tax liability and the installment percentage and due dates. The annual tax is cumulative and any change in the annual tax amount is adjusted for considering the incremental / decreased amount posted in the future installments.
For Indirect Tax payments—Click Indirect Tax Payments.
1. Set up the indirect tax pay term assumptions by entity, line item, and other custom dimensions in the Assumptions form.
2. For each line item:
  - Select the Tax Basis—Annually or Monthly.
  - For Indirect Taxes Due Date, enter a date; typically used for annual taxes.
  - Enter the Percentage and Due Period for up to five pay terms.
3. Review, adjust, or manually enter the indirect tax payments (the Driver Input).
4. Optionally, in the Assumptions column, enter an overall indirect tax value.
  Note that when the tax basis is monthly, Assumptions is not relevant. Instead, provide values for the specific periods.
Cash outflow is calculated based on the annual tax liability and the installment percentage and due dates. The annual tax is cumulative and any change in the annual tax amount is adjusted for considering the incremental / decreased amount posted in the future installments.
For DPO payments—Click DPO Payments.
1. In the Assumptions form, in the Assumptions column, you can review, enter, or adjust the Average DPO. Or you can enter a DPO value for each day.
  (The value in Assumptions is always days, even in a weekly or monthly plan.)
2. Review, adjust, or manually enter the DPO payments (the Driver Input).
Cash flow is calculated applying the average DPO for the period on the period expense or it takes the average DPO across the year if the DPO by period does not exist.
Save the dashboard after entering assumptions, which triggers driver calculations for each of the driver categories and calculates cash outflow.
Cash forecasts for each line item are calculated based on the assumptions you define, applied to the driver input. You can see all of the updated cash outflow forecasts in the Rolling Forecast form. See Performing Daily and Periodic Cash Forecasting.