Cash Flow Actual versus Contracted Cash Flow

Cash Flow Actual versus Contracted Cash Flow is a contract-management comparison between a contractor's actual cash flow and the cash flow forecast or phasing agreed in the contract. In Government of Canada procurement material, it is a subsection of "Contract Cash Phasing/Cash Flow" and belongs to the contractor's financial-management responsibilities.

The phrase comes from federal contract administration. It appears in the former Public Works and Government Services Canada Supply Manual and in current CanadaBuys material on agreements with the Department of National Defence (DND). In both places it names a specific item of contract management, one that measures what the contractor actually experiences against what the contract provides.

Where the term sits in the Supply Manual

The Supply Manual lists the term as subsection 5.3.4.1, under the heading "Contract Cash Phasing/Cash Flow." That heading sits near "Contractor's Financial and Management Systems," which places the subject among the financial controls a contractor is expected to maintain. The listing appears in the 2005 Supply Manual edition, and the same terminology appears in another Supply Manual edition.

How the DND responsibility matrix lists it

The CanadaBuys page on agreements with the Department of National Defence sets out a matrix dividing contract-management responsibilities between DND and Public Services and Procurement Canada (PSPC). The matrix numbers the items as follows:

• 5.3.4: Contract Cash Phasing/Cash Flow
• 5.3.4.1: Cash Flow Actual versus Contracted Cash Flow
• 5.3.4.2: Cash Flow Actual versus DND Planned Cash Flow for Financial Forecast

The matrix marks Cash Flow Actual versus Contracted Cash Flow with an "X" and an "M" in its responsibility columns. This shows the subject is one of the formal contract-management responsibilities the matrix covers.

Contracted cash flow compared with DND planned cash flow

The matrix keeps two comparisons apart. Item 5.3.4.1 measures actual cash flow against the contracted cash flow, which is the figure agreed in the contract. Item 5.3.4.2 measures actual cash flow against the cash flow DND planned for its own financial forecast. The first is tied to the contract. The second is tied to the department's internal forecasting.

Related items in the same matrix include "Target cost and cash flow plan," listed as item 3.5.3, and the broader Contract Cash Phasing/Cash Flow heading. Together these show that cash flow is treated as a planned element of the contract that is later checked against actual results.

What it means for a supplier bidding on Canadian public contracts

A supplier working on a federal defence agreement should expect cash flow to be managed against the contracted cash-flow profile. That profile is the baseline set in the contract. It is separate from DND's own planned cash flow used for financial forecasting.

• Treat the contracted cash flow as the reference point for tracking actual cash flow.
• Keep your own financial records in a form that lets you compare actual results to the contract's cash phasing.
• Read the cash-flow, cash-phasing and target-cost provisions of each solicitation and contract, since the Supply Manual places these under the contractor's financial and management systems.

For the full list of responsibilities and the surrounding terminology, review the CanadaBuys DND agreements page.