Plain definition
A funding gap is the amount by which available cash and committed funding fall short of forecast cash needs over a stated period. It is a planning estimate, not a permanent label: its size changes when the timing or amount of collections, payments, and funding changes.
Illustrative example
Monetary examples use Saudi riyals (SAR). The same principles apply in other currencies.
Suppose a twelve-week cash forecast requires to keep the balance above the approved minimum. Usable cash and funding already committed and drawable total . The funding gap is . If a customer payment is merely hoped for, it should not close the gap until its timing and amount are evidenced.
| Forecast cash need | |
|---|---|
| Usable cash and drawable committed funding | |
| Funding gap |
Why it matters
Naming the gap early creates choices. Waiting until the cash balance is low leaves fewer choices and may force expensive financing or missed obligations.
Practical consequence
Show the gap by week with its assumptions, low-point date, and owner for each response. Separate actions that reduce the need—collecting faster, delaying a discretionary purchase, reducing stock—from actions that provide funding. Update the gap after each material assumption changes.