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Q&A: In Light of the Pandemic, What Should We Include in Our Cash Balances for Forecasting Purposes?

It’s important to remember that liquidity refers to cash available for operations.

With the lingering effects of the COVID-19 pandemic, my church is trying to figure out how to best assess its cash flow going forward. Do you include in your cash-flow forecast your cash reserves and lender-mandated debt service reserves, or do you only include your “operational cash?”

When we’re looking at a liquidity assessment, we’re looking at total liquidity. That is, total cash available for operations. That includes cash reserves that are available for use if needed. The reason we do that is because we’re talking about a scenario such as the one created by the pandemic where a church may need to use its reserves—at least to some extent.

We’ll want to measure all of what we consider to be cash available right now for operations. Whether it’s in your operating account, in highly liquid investments, or in some other account, it is the cash ...

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  • July 6, 2020

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