How to Build a Simple Cash-Flow Forecast for Your Business
· Global Ledger Partners
A cash-flow forecast helps you understand when money is expected to enter and leave your business. It allows you to prepare for funding gaps, plan supplier payments and make better decisions about recruitment, investment and growth.
Start with your opening bank balance and estimate your expected cash movements for each week or month.
Expected Cash Inflows
- Customer payments
- Recurring subscriptions
- Loans or investment
- Tax refunds
- Other business income
Expected Cash Outflows
- Payroll and contractor payments
- Supplier invoices
- Rent and operating expenses
- VAT, tax and loan repayments
- Software, marketing and capital expenditure
The forecast should be based on the expected payment date, not simply the invoice date. It should also be updated regularly as new information becomes available.
A practical 13-week cash-flow forecast is particularly useful because it gives management a clear view of short-term liquidity without making the process unnecessarily complicated.
Key takeaway
Forecasting does not eliminate uncertainty, but it gives you time to respond before a cash shortage becomes a crisis.
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