Creating a Cash Flow Forecast

Why a cash flow forecast is important for your business

A cash flow forecast is a helpful financial planning tool that will help you estimate the amount of cash that will be flowing in and out of your business over time. It gives you a projection of how changes in your business activities and environment, such as sales, expenses, busy and slow periods, will impact your business’s cash position now and in the future.

You can anticipate periods of high or low cash availability and create realistic budgets, set financial goals, and avoid overspending. You will be able to identify cash shortfalls in advance and take proactive measures to combat them. You will also get a clear picture of your business’s financial health and it will provide a good measure to review against in the future. Best of all, with a cash flow forecast, you can make more informed decisions about your business based on its cash position.

How to create a cash flow forecast

To work out your cash flow, check out SBA’s simple cash flow forecast template.

  • Start by listing all your expected cash inflows, such as sales and loans, and cash outflows, including operating expenses and loan repayments.
  • Break down your expenses into fixed and variable costs and estimate the timing of these transactions based on payment terms and seasonal variations.
  • Create a monthly projection, beginning with your current cash balance and factoring in opening balances, inflows, and outflows to calculate closing balances.
  • Consider adding a contingency for unforeseen expenses, and regularly update and compare your actual cash flows to the forecast to adjust as needed.

Using a template such as our free cash flow forecast template will make this process easier and provide a visual representation of your cash flow over time.

Click below to download our FREE cash flow forecast template and get started today:

Find out how you can improve your business’s cash flow with some simple steps here.

Don’t forget if you need help with cash flow forecasting, reach out to your local SBA – we’re here to help.

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