How Cash Flow Forecasts Can Help You

Knowing your bank balance today is useful, but knowing what it is likely to be in three months is far more powerful. A cash flow forecast gives you that look ahead, helping you plan with confidence and avoid unpleasant surprises.

What Is a Cash Flow Forecast?

A cash flow forecast is an estimate of the money you expect to receive and the money you expect to pay out over a future period, usually weekly or monthly. It shows not only whether you will be profitable, but whether you will have enough cash on hand at each point along the way.

The Benefits for Your Business

With a forecast, you can spot a shortfall weeks before it arrives and take action, such as chasing invoices or delaying a purchase. It also helps you time hiring and investments, supports loan or lender conversations, and takes much of the stress out of running a business.

How to Build One

Start with your opening cash balance, then list the money you expect to come in from sales and other sources, and the money going out for payroll, rent, suppliers, taxes and loan payments. Subtract outflows from inflows to find your closing balance, then roll it forward into the next period.

Keep It Current

A forecast is a living document. Compare it with actual results every month, learn from the differences and adjust your assumptions. BillOas can build and maintain a forecast for you using the data in your cloud accounting system, so you can stay one step ahead.