Cashflow Forecast

March 13, 2022

Cashflow and Profit are the most important numbers in any business. Without generating both profit and positive cashflow, a business won’t be sustainable in the long term.

What is a Cashflow Forecast?

A cashflow forecast uses your current cash position together with your forecast trading and balance sheet position to predict your future cash position, so you can plan ahead for your business. It takes things into account like overall sales, operational costs, payments to lenders and cash from other sources like bank loans.

A positive cashflow will allow you to operate your business, pay suppliers and avoid getting into debt. It can also determine a company’s potential as it reveals whether a business can support itself. It’s also a reliable way to measure a company’s current and future success.

There are several distinct advantages to creating a cashflow forecast:

1. Predict your business’ future.

2. Understand possible outcomes - Once you know the impacts, you’re prepared for all eventualities.

3. Track late payments - Cashflow forecasting gives you insights into frequent late payers, how it impacts your bottom line and helps you pre-empt these situations.

4. Manage extra cash - Knowing when you might have extra cash, like after the busy Christmas season, means you can set up opportunities for further growth

5. Monitor resources - If you know when you’ll have cash gaps or increased demand, you can plan ahead and manage resources accordingly.

With a cashflow forecast, you can plan and budget accordingly.