Is the cash flow forecast realistic? Here’s why it should be

cash flow forecast

Having an accurate and realistic cash flow forecast is vital to any business, perhaps more so at present given the current economic climate and challenges.

What is the purpose of the cash flow forecast?

The cash flow forecast provides a summary of all cash flowing into and out of a business and how it’s used in the business. Crucially, it shows how much cash is available i.e. how liquid the business is.

The benefits of having a healthy cash flow

Users of the cashflow forecast can only make informed business decisions if the information is accurate and forecasts are realistic.

The business is then in a better position to meet its financial obligations as they fall due, including paying suppliers and staff. If cash is running low, the business may need to borrow to make such payments, or perhaps request extra credit terms until more funds are available.

Maintaining a cash surplus ensures the business remains adaptable should there be a change in the business plan or extra demands on cash reserves.

Cash flow forecasting relies on realistic expectations in the future, such as factoring in higher stock prices due to increased global shipping costs.

If cash flow is running low, businesses should spend time prioritising payees and renegotiating to preserve business relationships for the future, as well as preserving reputation and goodwill.

How we can help

We can prepare cash flow forecasts for all types of entity. By having a clearer picture of the cash flows in and out of the business, we can advise and help the business move towards a more optimal position.

Please get in touch with Anna Madden to find out more. Tel 01527 558539 or email [email protected] to discuss your requirements and discover how Curo can help your business thrive as it transitions through the various stages of growth.