Budget vs Actuals in Cash: Understanding Where the Money Moved (and Why It Matters for Unlisted Assets)

⚡ Quick Summary

• Traditional budget vs actuals reporting is built for P&L and EBITDA, but investors in unlisted assets care most about where the cash actually went.
• A cash-based BvA view reconciles opening to closing cash and shows how operations, working capital, capex, and financing really moved money.
• For unlisted infrastructure, it’s often the only way to separate one-off noise from structural performance, especially when assets are capital-intensive.
• You’ll build a simple bridge: budgeted cash → actual cash → variance by driver, with clear labels for timing vs permanent differences.
• The method forces visibility on customer concentration, overdue balances, and vendor terms that quietly erode cash.
• Done well, cash BvA becomes the backbone of your ongoing monitoring, connecting the post-acquisition cash plan to the long-term asset strategy.
• If you’re short on time, remember this: a cash-first budget vs actuals view is how you prove control of the asset and tell a credible story when the numbers surprise.

💡 Introduction: Why This Topic Matters

Many teams accept a gap between “what the P&L says” and “what the bank balance feels like.” In unlisted asset management, that gap is dangerous. Capital is concentrated, liquidity windows are lumpy, and boards expect tight evidence that cash is behaving as promised. A cash-based budget vs actuals view closes the loop. Instead of only comparing revenue and EBITDA, you explain how cash moved: operations, working capital, capex, debt, and equity flows. This is especially important when customer concentration risk or large maintenance cycles can swing cash dramatically from month to month. By anchoring your BvA in cash, you move beyond generic explanations (“slower revenue”) into concrete drivers investors understand. Combined with core concepts like cash vs profit, it becomes one of the most powerful tools for understanding unlisted assets over time.

🧩 A Simple Framework You Can Use

Use a four-part cash bridge: Operating Cash → Working Capital Movements → Capex & Investments → Financing & Other.

Start with your existing P&L-based budget vs actuals, then adjust to derive cash from operations (adding back non-cash items and aligning timing). Next, quantify working capital movements by mapping changes in AR, AP, and inventory to cash. For unlisted infrastructure, this is where delayed milestone receipts or vendor prepayments show up clearly. Then, layer in capex, equity injections, dividends, and debt flows. Finally, present a simple bridge from opening to closing cash, with each bar tagged as budgeted, actual, or variance. Tie this to your quarterly monitoring packs and your 90-day post-acquisition cash plan so stakeholders can see cause and effect, not just numbers.

🛠️ Step-by-Step Implementation

Step 1: Decide the Level of Granularity and Timeframe

Begin by choosing a timeframe (month, quarter) and level of detail. For most unlisted assets, monthly is the sweet spot, with quarterly roll-ups for boards. Decide which entities or SPVs sit inside your view and whether intercompany flows are included. Align with your financial adviser on what investors care about: operating cash, leverage, distributions, or all three. Then design a simple template that mirrors your P&L structure but adds columns for non-cash adjustments and working capital movements. This is also the moment to decide which exposures-customer concentration, key vendors, major projects-will be broken out individually. Once defined, lock this structure; consistency matters more than perfection, so the story is comparable period to period.

Step 2: Translate P&L Budget vs Actuals into Operating Cash

Take your existing budget vs actuals P&L and adjust it to a cash view. For each major line (revenue, COGS, opex), identify non-cash components such as depreciation, amortisation, and provisions. Add these back to derive proxy operating cash. Then consider timing: for example, annual insurance or licence fees that hit cash upfront but are expensed over time. Where the difference is material, create specific lines in your bridge. This step gives you “cash from operations, before working capital”-the foundation of your BvA. It’s also where patterns in unlisted infrastructure emerge, such as predictable seasonal swings or regulatory billing cycles that drive cash spikes.

Step 3: Layer in Working Capital Movements and Customer Dynamics

Next, quantify working capital movements. Compare AR, AP, and inventory (or WIP) balances between period start and end, then translate those changes into cash. Positive movements (e.g., lower AR) are cash generators; negative ones are cash users. Break out movements linked to your largest customers to expose high customer concentration and chronic late payers. Do the same for key suppliers. For unlisted assets, a single delayed milestone or prepayment can dwarf operating cash, so call these out explicitly. Map these movements against what was assumed in your post-acquisition cash plan; gaps here are often where value quietly leaks, or where quick wins live.

Step 4: Add Capex, Financing, and One-Offs

Now integrate capex, financing flows, and one-offs. Pull actual payments for maintenance and growth capex, then compare them to budgeted amounts and timing. For capital-heavy unlisted infrastructure, this is where over- or underspend against capex programs becomes visible. Add debt draws, repayments, interest, equity injections, and distributions. Flag true one-offs like transaction costs or restructuring outflows separately to avoid muddying recurring performance. The output is a complete cash bridge: opening cash → operating cash → working capital → capex & financing → closing cash. Label each bar as budget, actual, or variance so stakeholders can follow the story in a single view.

Step 5: Turn the Cash BvA into a Recurring Management and Board Tool

Finally, embed your cash-based budget vs actuals process into monthly close and quarterly board reporting. Build a simple dashboard that shows trends: how operating cash, working capital, and capex variances are evolving. Link the key drivers into your ongoing working capital improvement program and your longer-range asset forecasts. Use each cycle to refine thresholds: at what level of variance is action required, and by whom? Over a few quarters, patterns emerge-recurring issues with specific customers, systemic delays in approvals, or chronic under-investment in maintenance capex. When the time comes to consider exit readiness, you’ll have a track record of cash behaviour that’s far more persuasive than standalone P&Ls.

📌 Real-World Examples

Consider a portfolio of unlisted infrastructure assets where the P&L suggests everything is on track, but the holding company’s cash keeps tightening. A cash BvA shows that, across two assets, operating cash is roughly on budget, but working capital is consistently using cash, AR is stretching, while AP is shrinking. Drilling in, you find one major customer has changed its payment approval process, delaying receipts by 20-30 days, while your team is paying key contractors early to maintain goodwill. By quantifying this impact and presenting it in a clear bridge, you unlock a targeted action plan: tighten terms with the customer, renegotiate vendor timings, and align capex draw schedules. Over the next two quarters, the bridge shows that these changes have restored cash to plan, supporting the case for future investment.

⚠️ Common Mistakes to Avoid

A frequent mistake is treating cash BvA as a one-off “special analysis” instead of a core part of your unlisted asset management rhythm. Another is mixing working capital and operating cash effects, so no one can tell whether the issue is customers, vendors, or the business model. Some teams ignore customer concentration risk, presenting averages that hide the impact of one large payer slipping each month. Others overcomplicate the bridge with too many small categories, making it unreadable to boards. Finally, failing to reconcile the opening and closing cash exactly undermines trust in the numbers. The cure is discipline: a consistent template, clear labelling, and a relentless focus on telling a simple, accurate story of where the money moved.

❓ FAQs

🚀 Next Steps

Start by piloting a cash-based budget vs actuals bridge on one priority asset. Use the five-step process to move from P&L-only reporting to a full cash story, then socialise the outputs with operators, sponsors, and your financial adviser. Once the structure feels right, standardise it and roll it across the rest of your unlisted assets, feeding results into your broader budgeting and forecasting process. Finally, connect recurring variances to specific initiatives-collections improvements, vendor term resets, capex rescheduling-so the bridge translates directly into action. Over time, you’ll have a portfolio-wide view of how cash actually behaves against plan, giving you a decisive edge in managing unlisted infrastructure through cycles.