How would you build a rolling 12 month cash flow forecast?
Assesses fundamental understanding of Accounting & Finance conventions, runtime behavior, and memory/performance considerations.
Hiring managers look for precision, avoidance of ambiguous jargon, and ability to explain trade-offs under real production conditions.
I build the forecast from drivers, not from a flat growth assumption.
First I establish the opening cash balance, then project inflows and outflows month by month for the next twelve months on a rolling basis. For collections I use actual invoice terms and customer payment behaviour, so a sale in March on sixty day terms lands in May. I separate committed revenue from pipeline and weight the pipeline by probability.
Outflows include payroll, rent, supplier payments, tax, loan repayments and capital expenditure. I add known one offs such as quarterly VAT or annual insurance.
Then I produce three scenarios, base, downside and upside, and identify the minimum cash balance and the month it occurs. That tells us whether we need a credit facility or can invest. I refresh it monthly by replacing forecasts with actuals and extending the horizon, and I review variances to improve my assumptions.
Candidate Response Strategy & Interview Tips
- Start with a concise one-sentence summary: Deliver a direct, confident answer first before expanding into nuances.
- Demonstrate real-world trade-offs: Discuss where this approach excels and when you would avoid it in production systems.
- Discuss complexity & edge cases: Proactively explain time/space complexity or boundary conditions (null values, scale limits).
- Prepare for interviewer follow-ups: Technical hiring panels frequently probe deeper into concurrency, backward compatibility, or alternative libraries.