The significant objectives of short-term cash forecast are as given:
- find out operating cash requirement
- anticipating short term financing
- Organization investment of surplus funds.
The short-term cash forecast assists in finding the cash requirement for a predetermined period to run a business. Under the absence of such information the finance manager would not be capable to decide upon the cash balances to be well-maintained. Besides to this the information specified earlier would also be needed to tie up with the financing bank so as to meet anticipated cash shortfall and also to draw strategies to invest surplus cash in securities along with suitable maturities. Some of the other purposes of cash forecast are as:
- planning decrease of short and long term debt
- scheduling payments in association with capital expenditure programmes
- planning forward purchase of inventories
- obtaining advantage of cash discounts offered through suppliers, and
- guiding credit policy.