🧰 Before You Begin
Multi-entity work starts with structure. List all entities in scope – trading companies, holding entities, SPVs, and service vehicles. For each, identify bank accounts, overdrafts, term loans, and any restricted cash. You’ll need clean trial balances and a basic understanding of intercompany loans, guarantees, and cross-charges. Make sure your accounting systems can produce entity-level AR/AP ageing and scheduled debt service; this is the raw material for entity cash forecasting.
Next, clarify who needs what view. Boards may want a simple group cash flow statement; lenders may ask for entity-specific coverage metrics; operators may only care about their own 13-week cash forecasting board. Align your design with other consolidation exercises you already run for the P&L and balance sheet. Lastly, decide up front which entities must remain ring-fenced and which can share liquidity. This will shape how you handle intercompany transfers, sweeps, and minimum cash thresholds in the model.
🧭 Step-by-Step: Building a Multi-Entity Cash Model
Step 1: Map Your Entity Structure and Data Sources
Start by creating an entity register that lists each company, its role (operating, holding, SPV), currency, and key facilities. For each entity, assign a data source for bank balances, AR/AP, and debt schedules. Where possible, automate imports from your accounting and banking systems so entity cash forecasting isn’t a monthly manual exercise.
Then, standardise naming and chart-of-account mapping so similar items line up across entities. This doesn’t mean changing local ledgers; it means defining a consolidation mapping that translates them into a common structure. Align this work with your existing cash flow foundations pillar and consolidation rules. The goal of this step is a clean skeleton: you know exactly where each entity’s cash data comes from, how it’s mapped, and how often it’s refreshed.
Step 2: Build Entity-level 13-week Cash Views
Next, give each entity a standalone 13-week cash flow view. Use the same structure across entities: opening cash, inflows, outflows, and closing cash by week. Populate inflows from expected customer receipts, intercompany inflows, and funding drawdowns; outflows from suppliers, payroll, tax, interest, and principal. This mirrors the owner-manager weekly rhythm but at the entity scale.
Where entities share customers or suppliers, be explicit about who gets paid or paid first to avoid double-counting. For financing SPVs, focus on debt service, covenants, and reserve accounts. For trading entities, emphasize working capital and operating cash. The point is to see which entities generate cash, which consume it, and over what horizon. Only when this entity-level view is stable should you attempt consolidated multi-entity cash flow reporting; otherwise, you’re just adding another layer of noise.
Step 3: Design Consolidation Rules and Intercompany Flows
With entity-level boards in place, define how they roll up. Decide whether you’re aggregating by legal group, region, or business line. Create simple rules for intercompany eliminations to prevent double-counting of internal cash movements at the group level. For example, treat intercompany loans as inflows in one entity and outflows in another, then eliminate them in the consolidated view.
If your financing covenants are set at both the entity and group levels, model coverage ratios at each. Tie these rules back to your broader consolidation framework so the logic remains consistent across P&L, balance sheet, and cash flow statement views. Now, when you roll up the 13-week boards, you can see the group’s true external cash flow while still monitoring internal funding flows. This is the backbone of reliable multi-entity cash flow reporting.
Step 4: Build Scenarios and Funding Playbooks
Once the base case is running, introduce scenarios. Start with simple levers: slower collections in one market, delayed project milestones in another, or changes in cash flow vs profit from pricing or margin shifts. For each scenario, view both entity and group impacts. This helps you see where a local issue creates group-wide liquidity stress and where spare cash can be redeployed safely.
Develop funding playbooks that map specific triggers to actions: for example, when entity A’s forecast cash drops below a threshold, entity B can lend within limits, or a revolver can be drawn. Align these playbooks with your existing cash forecasting and budgeting frameworks. Over time, you can add more sophisticated scenario tools or cash flow methods, but the starting point is simple, transparent rules that everyone understands.
Step 5: Operationalise Reporting and Governance
Finally, make multi-entity cash flow reporting part of normal governance, not a one-off project. Agree on a cadence – weekly for stressed situations, fortnightly or monthly for stable portfolios. Use consistent templates so entities can submit updates quickly, or automate where possible. At the group level, create a simple pack that shows bank positions, projected headroom, key risks, and planned funding actions.
Align this reporting with your board and lender updates, so you’re not maintaining multiple, inconsistent views. Make sure roles are clear: who owns entity forecasts, who consolidates, and who decides on transfers or capital calls. Where you work with external advisors or asset managers, plug them into the same structure. Over time, this governance layer turns cash flow foundations into a strategic advantage: you can move faster on acquisitions, refinancing, and capex because you trust your cash forecasting across the group.
⚠️ Tips, Edge Cases & Gotchas
Be careful with entities that have ring-fenced cash or bank covenants; don’t assume you can freely sweep their balances into group liquidity. Model restricted and unrestricted cash separately and make this visible in your consolidated cash flow statement. Treat foreign-currency entities with care: build FX assumptions into both opening balances and flows so you’re not surprised by translation effects.
When multiple entities share customers or suppliers, define clear rules for who invoices and collects to avoid double-counting inflows or masking credit risk. For acquisition vehicles, align multi-entity cash flow with your post-acquisition cash plans and working-capital playbooks. And resist the urge to let every entity build bespoke spreadsheets. Standard templates or a centralized modelling environment make it far easier to maintain consistent cash flow foundations, onboard new entities, and keep your group picture accurate as the structure evolves.
📊 Example / Quick Illustration
Consider a group with three entities: a trading company, a property SPV, and a shared-services entity. Consolidated accounts show strong cash flow vs profit, but the trading entity’s 13-week cash forecasting board reveals a looming shortfall in six weeks. Meanwhile, the property SPV is cash-rich due to stable rental income, but its facility restricts distributions below a minimum cash balance.
By building entity-level boards and a multi-entity cash flow consolidation, the CFO sees that a small intercompany loan from the SPV, plus a draw on the group revolver, comfortably covers the trading shortfall. The board gets a clear pack showing why the move is safe and how cash will be repaid. Without this structure, the problem would only surface when the trading entity hit its overdraft limit – turning a solvable issue into a crisis.
🚀 Next Steps
You now have a practical framework for building multi-entity cash flow visibility across your group. Start with a pilot: pick three entities, build 13-week boards, and roll them into a simple consolidated view. Once the mechanics work, extend coverage and connect the output into your broader consolidation and planning processes. Over time, integrate automation and scenarios so you can test acquisitions, refinancing, and capex decisions with confidence.
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