Why Your Business Needs A Cash Flow Forecast

Cashflow forecast

As a business owner you’ve probably heard of a cash flow forecast, but is this something that only big-time business owners should be doing or should you be paying attention to this too? 

Cash flow forecasting is a crucial tool for businesses of all sizes. It’s not limited to large corporations or for exciting startups that are trying to attract investment. Whether you’re a small, established or a growing company, a cash flow forecast can make a significant difference in your financial health and overall success.

Why is a cash flow forecast so important?

Well, it provides you with a clear picture of the money flowing in and out of your business over a specific period. It helps you predict your future cash position, allowing you to anticipate potential shortfalls or surpluses. By identifying cash flow bottlenecks early on, you can take proactive measures to address them and prevent financial distress.

Cash Flow Forecast in business

Can a cash flow forecast save my business from failure?

While it’s a powerful tool, it’s not a magic wand. A cash flow forecast alone may not be enough to guarantee your business’s survival. However, when used in conjunction with other financial management strategies, CFO services and sound business practices, it becomes an invaluable resource in steering your company towards success.

A cash flow forecast enables you to make informed decisions about investments, expenses, and managing your working capital. It helps you optimize your cash flow, control costs, and improve receivables management. By understanding your cash flow patterns, you can allocate resources more effectively and avoid financial pitfalls.

Cashflow forecasting

5 advantages of a cash flow forecast

1. Anticipatebottlenecks

By detecting potential shortages early on, you can take proactive measures to mitigate their effects. It allows you to apply for a loan in advance, postpone investments, or even consider liquidating certain assets strategically. By staying one step ahead, you can maintain a healthy cash flow and avoid financial setbacks.

2. Better planning of investments

When you have a clear understanding of your future cash flow, it becomes easier to plan your investments. A cash flow forecast provides valuable insights into expected surpluses in the coming months. This knowledge empowers you to make informed decisions about how to allocate your resources. 

Perhaps you’ll decide to build up reserves for future opportunities, hire new staff or purchase new assets for the business. Without an accurate cash forecast it’ll be difficult to make these decisions without putting your business at risk.

Scenario analysis

Life is full of unexpected twists and turns, and the business world is no different. Scenario analysis is a vital tool in cash flow forecasting. By running various scenarios, you can assess the potential impact of different situations on your future cash flow. 

For example, what will happen if there’s a bottleneck in your supply chain, or a major customer suddenly drops you? By exploring these scenarios, you can evaluate your options and develop contingency plans to navigate through challenges. 

Improved cost control

Controlling costs is essential for any business, and a cash flow forecast can be your guiding light. By closely examining your monthly expenses within the forecast, you gain a clearer understanding of your spending patterns. This prompts you to evaluate individual cost factors and optimize your expenses. It’s like shining a spotlight on your financial landscape. 

It enables you to identify areas where you can trim unnecessary costs and streamline your operations. With efficient cost control practices, you can ensure that your business operates at optimal costs in the long run, improving your overall profitability.

Enhanced receivables management 

Managing receivables can sometimes be a challenge, especially when cash flow issues arise due to late customer payments or extended payment terms. However, a cash flow forecast can come to the rescue. 

By closely monitoring your cash flow projections, you can identify recurring cash flow problems related to receivables. Armed with this knowledge, you can optimize your receivables management practices. This might involve adjusting payment terms, implementing stricter collections procedures, or exploring alternative financing options to bridge any cash flow gaps. With enhanced receivables management, you can improve your cash flow and maintain healthy customer relationships.

forecasting cash flow

Cash flow management services

Regardless of the size of your business, don’t underestimate the power of a cash flow forecast. Combine it with sound financial management practices, effective budgeting, and strategic decision-making, and you’ll be well-equipped to steer your business away from failure and towards long-term success.

At Ease Support we’ve created a custom 13-week rolling cash flow forecast that updates weekly to keep you informed about your future cash positions. Speak to us today about our cash flow management services.


What are the 3 types of cash flow?

A business’ cash flows come from three main sources: operating, investing, and financing.

How can I improve my business cash flow?

Regularly reviewing your financial statements, tracking key metrics, and adapting your strategies as needed will help maintain a healthy cash flow. Get more tips on how to improve your cash flow here.

What is a 13-week cash flow forecast?

A 13 week cash flow forecast is a financial projection that predicts a company’s cash inflows and outflows over a 13-week period. It provides a short-term outlook on cash flow dynamics and helps businesses identify potential cash shortages or surpluses. A general cash flow forecast extends beyond 13 weeks, offering a broader and longer-term perspective on cash flow projections.

What are the benefits of a 13-week cash flow forecast?

A 13 week cash flow forecast allows businesses to gain a clearer understanding of their short-term cash flow position. It enables them to anticipate cash flow fluctuations, make informed decisions, and take necessary actions to maintain a healthy financial position. This shorter-term forecast complements longer-term financial planning efforts and offers more agility in responding to changing market conditions.


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Hiring a bookkeeper or accountant means hiring expertise. Most business owners don’t want to be number-crunchers or analysts – they just want to work on what they know and do best.

The peace of mind alone that comes from knowing your finances and taxes are in order can be worth the price of a good bookkeeper

When you are just starting out, it makes sense to DIY your books. Maybe you are trying to start a business out of your garage or home office. Maybe you have such a low transaction level that you can get away with only doing bookkeeping one or two days a week.

As soon as your bookkeeping starts getting in the way of what you need to be doing as CEO, though, it’s time to consider getting some help.

And, if you need financial statements for lenders or investors, an accountant or bookkeeper can prepare those for you.

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