financial planning
Cash Flow Forecasting: Why Linear Models Lie and Stochastic Models Save the Day
I argue that linear models overstate cash reserves, masking volatility; stochastic approaches reveal hidden risks and deliver sharper forecasts. In today’s data-rich environment, the question isn’t whether forecasts exist, but whether they are trustworthy. In 2023, the average forecast error for linear cash-flow models exceeded 18% for small-to-mid-size