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Cash flow forecasting is one of the most important things your business should be doing. It’s how your company can predict your profits and debt at year end. It will also help you set your financial goals for the next year.


Here are 4 steps to make an accurate cash flow forecast:


  1. Estimate The Income You Will Receive – The first step in any cash flow forecast is to estimate how many sales you think you will be bringing in either weekly or monthly. A great way to do this is to look at the past couple of years and try to get a good idea of, considering the past year’s performance at that time, what kind of weekly or monthly sales you expect to see. Your sales may not be consistent, so take into consideration patterns that are similar each year, such as seasons and holidays, and factors that could change each year when making your projections.
  2. Consider When You Are Going to Get Paid – It’s crucial when doing a cash flow forecast to estimate when you expect payment from your sales. For many of your sales, you could be waiting 30 or more days to see that cash. By projecting this, you not only know how much you expect to make, but when you can expect to receive it.
  3. What Do You Plan on Spending? – When making your cash flow forecast, it’s absolutely crucial you are able estimate how much your company spends. These costs are going to be both fixed and variable, so do the best you can to estimate the figures either weekly or monthly. You’ll need to estimate what bills you will have and when they will need to be paid.
  4. Crunch The Numbers – Now, it’s about bringing these numbers together so you can really put them to good use. To begin, add in an opening bank balance, and then you simply add in whatever your revenue is minus expenses for the time periods you’re looking to forecast.  Staying on top of your cash flow forecast will help insure accuracy when moving forward.


Cash is what makes your business run, and if you don’t keep a proper eye on what cash is coming into your business and what cash is leaving it, you might find yourself in trouble. Make a habit of continually preparing cash flow forecasts, ensuring financial stability for your business.