Forecasting tool


A Cash flow forecast is used to predict your business’s future financial position for the period ahead. Your forecast allows you to see what money you expect to be paid into the business and the amount you’ll need to payout. It’s a useful tool to help you manage your business more effectively.

The process of predicting cash is a valuable exercise because:

  • It allows you to see when you are likely to have a problem with cash over a longer period than predicting the cash burn rate.
  • It will show you how cash-viable your business is, and how likely you are to have a problem if any.
  • By knowing the size and the length of the problem, you can then plan to do something about it.
  • Banks and Lenders will appreciate that you have a handle on things if you can show them that the future position is temporary and that you are predicting problems.

The physical production of a cash flow forecast doesn’t have to be difficult.

The key elements are:

  • An opening bank balance.
  • Cash in – money received from your debtors etc.
  • Cash-out – cash paid to creditors etc.
  • Typically a list of overheads is included so you can highlight major outgoings.
  • A closing balance.

This is often produced on a monthly basis to give a rolling figure.

TOP TIP – It is good practice to update the cash forecast for the actual closing balance, and then have the forecast update for this. This will keep your forecast from getting too far out of kilter.

We have a FREE Cash Forecasting template for you to download and get started below.