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Working Capital Specialists


Cash is always king

A cash flow forecast will assist any company in finding out the future balance in their bank account at any given time

Good cash flow management is all about balancing the cash coming into the business (Receipts) with the cash going out (Payments). It is crucially important that you actively manage and control these cash inflows and outflows. To help you we have created this FREE cash flow forecasting model.

View CashFlow Forecast Cash forecasting may be required if you are looking to banks or investors for investment, loans or overdrafts. It may also be required for Management on a regular basis to assist them in business decisions. Even if you are a sole trader you may find our forecasting tool useful.

More often than not, cash inflows seem to lag behind your cash outflows, leaving your business short of working capital. That’s where Factoring or Invoice Discounting can help.

To save you time we have created this FREE, online cash flow forecasting model. To save your cash flow forecast first create a FREE account. You can then set-up, print and save as many cash flow forecasts models as you like. We hope this becomes a useful resource. If you have any suggestions we are always happy to hear.


Cash flow is the movement of money in and out of your business

Cash flow forecasting enables you to predict peaks and troughs in your cash balance. It helps you to plan how much and when to borrow and how much available cash you are likely to have at a given time. Turnover is vanity, profit is sanity, but cash is always king. Being profitable does not necessarily mean being liquid.

A cash flow forecast is one of the most useful financial tools in your small business arsenal. You already know that your business needs a positive cash flow to be a success but you might not know these hints and tips of how to use cash flow forecasts to improve your business.

Many businesses will be expected to prepare a cash flow forecast as part of their business planning. This means trying to plan when costs will arise over the next year and what they think their sales revenue is going to be.

Ideally, you will have more money flowing into the business than out. This will allow you to build up cash balances to deal with short-term costs. Diligent cash flow management is essential to the health of your business. Most firms can survive periods of break even or even making a loss, but they can only run out of cash once.

You can use your cash flow forecast to check if your business is meeting your expectations. Comparing your actual income and expenses with your forecasts can identify areas where your business is over or under performing.

The importance of good cash flow management is particularly relevant when access to working capital is difficult and expensive. Cash flow is the lifeblood of all businesses and is the primary indicator of business health.


Turnover is vanity, profit is sanity, but cash is always king

Understanding cash flow is the key to running a successful small business. Good cash flow management will help ensure your business runs smoothly and it gives you the insight to keep on top of your firms financial health. Having a clear understanding of where your firm’s working capital is tied up (e.g. invoices, stock etc), when it is likely to come in, and what cash commitments are coming up is extremely advantageous to know in advance. Preparing a cash flow forecast will help you to:

  • Identify potential cash flow shortages and take action to reduce its impact (e.g. negotiating new terms with suppliers, additional borrowing or chase overdue invoices)

  • Plan ahead, make investments without being concerned that existing commitments will not be met (e.g. pay wages)

  • Reduce dependence on your Bank and save interest charges by paying down debt when you have surplus cash

  • Identify surplus cash which can be invested to earn interest

  • Demonstrate to your Banker, investors, customers and suppliers that your business has a healthy cash flow even in these times of liquidity squeeze


Your aim should be to speed up the inflows and slow down the outflows wherever possible

Forecasting your sales is key to projecting your cash receipts. The quicker you can collect cash, the faster you can spend it and put it back to use to meet cash outflows (such as wages, paying suppliers, buying stock or debt payments).

Estimating your projected sales for your business is the hardest part of completing your cash flow. Using your cashflow forecast to avoid overtrading.The first step is to estimate your likely sales for each week or month. Use your previous sales history from the last couple of years to get a good idea of the level of weekly or monthly sales you can expect.

If you are just starting a business, you will need to estimate your forecasts based on information from customer surveys, suppliers, industry experts, and the performance of similar businesses.

Getting your customers into a regular payment cycle helps with planning your cash flow. Many of your regular cash outflows will need to be made on fixed dates.The next step is to estimate when you expect to receive payment for your sales. Projecting cash receipts is a little more involved. If you operate a cash sales business forecasting is relatively easy since payment occurs at the time of sale.

If you sell on credit you will need to factor the likely delay in payment into your cash flow forecasts. If your terms are say 30 days you can then expect to receive payment between one to two months after the sale has been made.

Collecting debts could be considered a competitive sport, if you are not being paid then someone else might well be.

Projecting your expenses and costs over a period is critical. When projecting your cash flow you should use the payment periods already agreed with suppliers. Operating expenses should include things like payroll and payroll taxes, utilities, rent, insurance and repairs and maintenance and, like the cost of goods sold, can be fixed or variable. Rent, for example, is likely to be the same amount each month, and you will probably have plenty of notice of any change. However, payroll, stock or utilities may vary in line with your sales projections and have a seasonal aspect.

Please note that the cash flow model provided is a guide only and should neither replace competent advice, nor be taken, or relied upon, as financial or professional advice. Seek professional advice before making decisions that could affect your business.