Positive cash flow is the heartbeat of any successful business. With so many pressures on your cash, it’s essential to have one eye on the future. Cash flow forecasting is one of the most valuable financial tools available to you.
What Is Cash Flow Forecasting?
A cash flow forecast projects your expected income and expenses over a future period — typically 13 weeks, 6 months or 12 months. It shows you when cash will be tight, when surpluses will appear, and helps you plan accordingly.
Why It Matters
- Avoid nasty surprises — see potential shortfalls weeks or months in advance
- Plan major purchases — know when you can afford to invest in equipment, staff or marketing
- Manage debt — plan loan repayments and tax payments around your cash cycle
- Secure finance — lenders and investors want to see forecasts before they commit
- Make confident decisions — data-driven decisions are better decisions
How to Build a Simple Forecast
- Start with your current bank balance
- List all expected income (invoices due, recurring revenue, seasonal patterns)
- List all expected expenses (rent, salaries, suppliers, tax, loan repayments)
- Project forward week by week or month by month
- Review and update regularly — a forecast is only useful if it’s current
Tools That Help
Cloud accounting platforms like Xero and QuickBooks have built-in cash flow reporting. For more advanced forecasting, tools like Float and Spotlight Reporting integrate directly with your accounting data.
Talk to our team about setting up cash flow forecasting for your business.