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Cash Forecasting Payments for Trade Accounts Payable

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Forecasting Payments. If a firm pays its bills with a 30-day delay, what fraction of its purchases will be paid for in the current quarter? In the following quarter? What if its payment delay is 60 days?

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Solution Summary

The solution presents schedules to show the payments spread over both 30 day delays and 60 day delays. It also provides reasons why this type of schedule could be important for business and cash flow planning.

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Most cash forecasting uses payment periods of 0-30, 31-60, 61-90. Because of the dates in this problem, the following schedule would represent payment months:

30 day schedule for payment
Jan purchases would be paid in Feb
Feb purchases ...

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