Monthly Cash Flow Forecasting Tool

Every business needs to create a monthly Cash Flow Forecast to understand the cash needs of the business and highlight those times when cash will be short.

Trying to run a business without preparing a Cash Flow Forecast is a recipe from stress and sleepless nights!  It is also like trying to drive your car blindfolded – you are an accident waiting to happen!

A Cash Flow Forecast is not just for the bad times!

Many businesses only complete a Cash Flow Forecast when requested to do so by their Bank or if they are are experiencing cash flow difficulties – however a like a Business Plan, a Cash Flow Forecast is a management tool business owners can use to guide the growth of their business.

It is important also to remember that when things are going well – that is the time when a Cash Flow Forecast should be prepared – the reason is simple – as sales increase so do the cash needs of the business – more stock needs to be purchased, operating expenses increase, extra staff needs to be employed etc.

The reality is as many businesses run into cash flow difficulties due to growth as do those experiencing a shortfall in sales!  Preparing a Cash Flow Forecast allows you to plan for these eventualities.

Who should prepare the Cash Flow Forecast

For many preparing a Cash Flow Forecast for the first time can be a daunting prospect – a lot of business owners simply prefer to have their Accountant or Bookkeeper complete the exercise. However, whilst this certainly saves time – the  reality is,  no one knows your business, it’s cash ebbs and flows, client payment patterns better than you, the owner!

Certainly we recommend you have your Accountant or Bookkeeper check and fine tune the Forecast – but for it to have real value and be a tool you can use to guide the growth of your business, we suggest you complete it yourself in the first instance.

 

Preparing a Cash Flow Forecast is simply not that hard!

Creating a Cash Flow Forecast is not that difficult – if you go about it the right way.  We suggest a 3 step process:

 

Summary

A Monthly Cash Flow Forecast is a valuable tool you can use to understand the cash needs of your business. Similar to a Business Plan, it can also be used to guide the growth of your business.

If you follow the process we outline, it is also not that difficult an exercise to complete – nor does it take all that long!
Should you wish to learn more about managing the financial side of your business, consider enrolling in our Decide Your Income Workshop – the cost of which includes a FREE session with an experienced SBMS Mentor.