BUILD A CLIENT CASH FLOW FORECAST

Collect and organise the following before you start: - Current income sources (salary, rental income, dividends, business distributions, trust income) - Monthly and annual expenses (fixed and discretionary) - Existing investment portfolio with current values and asset allocation - Debt obligations (mortgage, vehicle finance, credit facilities) with outstanding balances, interest rates, and remaining terms - Insurance premiums (life, disability, medical aid) - Tax residency and marginal tax rate - Any expected future events: retirement date, children's education costs, property purchases, business sale, inheritance Save everything as PDFs or export spreadsheets. The more complete the data, the more accurate the forecast.

Open your AI tool and upload all the client documents. If you have multiple files (bank statements, portfolio reports, tax returns), upload them all in one go. Tip: If the data is in a spreadsheet, export it as a PDF as well. AI tools handle PDFs more reliably than raw .xlsx files for initial analysis.

Ask the AI to read all the documents and build a structured financial snapshot. Use this prompt: 'Read all the uploaded documents carefully. Extract and organise the following into a structured table: 1. All income sources with annual amounts 2. All expense categories with annual amounts 3. All investment holdings with current values and asset classes 4. All debt obligations with balances, interest rates, and terms 5. Insurance and protection costs 6. Tax rate and residency 7. Any future financial events mentioned (retirement, education, property) Present this as a clear financial snapshot. Flag any data that appears incomplete or inconsistent.' Review the output carefully. This baseline drives everything that follows.

This is the critical step. You need to set the assumptions that will drive the projection. Use this prompt: 'Using the financial snapshot above, I need to build a cash flow forecast. Apply the following assumptions: Growth Assumptions: - Salary/income growth: [X]% per annum (e.g., CPI + 1%) - Expense inflation: [X]% per annum (e.g., 5.5% aligned to SA CPI) - Investment returns by asset class: - SA Equity: [X]% nominal (e.g., 11%) - SA Bonds: [X]% nominal (e.g., 9%) - SA Property: [X]% nominal (e.g., 8%) - Offshore Equity: [X]% nominal (e.g., 10% in ZAR terms) - Cash/Money Market: [X]% nominal (e.g., 7.5%) Interest Rate Scenarios: - Base case: SA repo rate at [X]% (e.g., 7.5%), prime at [X]% (e.g., 11%) - Bull case: Rates decrease by 150bps over 2 years - Bear case: Rates increase by 200bps over 18 months For each scenario, adjust: - Debt servicing costs (variable rate debt reprices) - Money market and bond returns - Property capitalisation rates Tax Assumptions: - Marginal income tax rate: [X]% - Capital gains inclusion rate: 40% for individuals - Dividend withholding tax: 20% - Interest exemption: R23,800 (under 65) / R34,500 (65+) Present the assumptions in a clear table before proceeding.' Replace the bracketed values with the client's actual data or your house view assumptions.

Now ask the AI to build the actual forecast: 'Using the assumptions above, generate a year-by-year cash flow projection for the next [10] years. For each year, show: 1. Total income (after tax) 2. Total expenses (inflated) 3. Net cash flow (surplus or deficit) 4. Investment portfolio value (with returns applied by asset class) 5. Total debt outstanding (with repayments) 6. Net worth (assets minus liabilities) Present this as a table with one row per year. Run all three interest rate scenarios (base, bull, bear) and show them side by side or in separate tables. Highlight the year in which the client achieves financial independence (where investment income exceeds expenses) under each scenario. If they do not achieve it within the forecast period, state this clearly.' This gives you the core output: a multi-scenario cash flow model.

Challenge the model with realistic shocks: 'Now stress-test this forecast with the following scenarios: 1. Job loss: Income drops to zero for 12 months in Year 3. How long do reserves last? 2. Medical event: R500,000 unplanned expense in Year 2. Impact on net worth trajectory? 3. Rand depreciation: ZAR weakens 20% against USD in Year 1. Impact on offshore holdings and imported inflation? 4. Extended rate hike cycle: Prime rate reaches 13% and stays there for 3 years. Impact on debt servicing and cash flow? 5. Market drawdown: SA equity drops 30% in Year 1 and recovers over 3 years. Impact on portfolio and retirement timeline? For each stress test, show the impact on the client's net worth in Year 5 and Year 10 compared to the base case.' This is where the forecast becomes genuinely useful. Clients and advisors need to see what happens when things go wrong.

Ask the AI to synthesise the analysis into actionable advice: 'Based on the cash flow forecast and stress tests, provide recommendations in the following areas: 1. Cash buffer: How many months of expenses should the client hold in cash or money market? Is their current buffer adequate? 2. Debt strategy: Should the client accelerate debt repayment given the interest rate outlook? Which debts should be prioritised? 3. Asset allocation: Is the current portfolio allocation appropriate for the client's time horizon and risk profile? Suggest adjustments. 4. Insurance gaps: Based on the stress tests, are there any protection gaps (life cover, income protection, dread disease)? 5. Tax efficiency: Are there opportunities to restructure income or investments for tax efficiency (e.g., retirement fund contributions, offshore allowance, tax-free savings)? 6. Milestone risks: Which future events (retirement, education) are most at risk under adverse scenarios? Present each recommendation with the rationale and the specific numbers from the forecast that support it.' Review each recommendation against your own professional judgment. The AI provides the analytical framework; you provide the advisory context.

Ask the AI to format the forecast for Excel: 'Convert the base case cash flow projection into a format I can paste into Excel. Use tab-separated values with clear column headers. Include: - Year - Total Income - Total Expenses - Net Cash Flow - Portfolio Value - Total Debt - Net Worth Also provide the formulas or logic for each calculation so I can adjust assumptions directly in the spreadsheet.' Paste the output into Excel. This gives you an editable model you can refine, share with the client, or present in a review meeting.

Generate a client-facing summary of the forecast: 'Draft a 1-page executive summary of this cash flow forecast for the client. Include: 1. Current financial position (net worth, annual surplus/deficit) 2. Key assumptions used 3. Projected net worth in 5 and 10 years under base case 4. The most significant risk identified in stress testing 5. Top 3 recommendations with clear next steps Tone: Professional, warm, and confident. Avoid jargon. The client should understand their trajectory and feel informed, not overwhelmed.' Review and personalise before sending. Add your own commentary where the AI's output feels generic.

This is non-negotiable for financial projections: - Check all numbers against the source documents. Verify income figures, expense totals, and portfolio values. - Recalculate at least 2-3 years of the projection manually or in Excel to confirm the AI's math. - Verify tax calculations against current SARS rates. - Check that interest rate scenario impacts on debt are directionally correct and proportional. - Upload the final forecast to a different AI tool and ask: 'Review this cash flow forecast for mathematical errors, inconsistent assumptions, or unreasonable projections. Be critical.' Never send a financial projection to a client without manual verification. The AI accelerates the work; it does not replace your fiduciary responsibility.