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When starting a business or running an established one, profit is not the only the key to success – a major factor in survival is cash flow.  As a business owner it is important to know your cash position at the bank to ensure there is enough available for your business to trade.

Cash Flow Forecast Template

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What is a cashflow forecast?

A cashflow forecast (or cash flow statement) is a document that forecasts the cash movements in your business over a financial year, but can also be applied to a quarter or a month.

What should a cashflow forecast include?

Your cash flow forecast should include: sales, income and expenses.  Expenses should include  wages, stock/materials, professional services, rent, rates, and one off expenses such as computers or machinery.

Should a cash flow forecast include VAT?

If you are VAT registered ensure that your sales are recorded exclusive of tax.

Why do you need a cashflow forecast?

Predicting your cash flow is an essential tool for planning. There are a number of advantages to having a cash flow forecast:

  • Predict when you might have a shortage in cash flow (seasonal sales, seasonal expense)

  • Allow you to plan for cash flow shortages – will you need to borrow, or hold back on investments, do you need to adjust payment terms?

  • Allow you to report on your business position which might be a requirement for investors or your bank.

  • Allow you to test -– by adjusting your cash outflows and in-flows you can analyse  how investments or changes to your cash inflow would effect your monthly bank balance.

  • Check whether the business is reaching it’s KPI’s as set out in the business plan

Your cash flow forecast should record the dates that you expect cash to enter or leave your account rather than when you invoice a customer or receive an invoice. 

It is vital to enter the opening and closing bank balance for each month so that you can predict over a specified time when you might experience a shortfall in cash and be able to plan and prepare for that event.  It will also help you identify when you have cash available to invest in or expand your business.

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Who should use a cash flow forecast?

Building a cash flow forecast can seem daunting which is why we have created a template to get you started.  It can be hard to predict these figures when your are just starting out,  but over time the data you collect will help fine tune your cash flow forecast to better predict the financial health of your business and guide you in making the right businesses decisions at the right time. A cash flow forecast should be used by all businesses - large or small to guide monitor, predict and plan  your future success. 

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Gareth Wilding

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Registered Company Address: Berkeley House, Amery Street, Alton, Hampshire, GU34 1HN.

Styles & Associates Ltd, registered as a limited company in England and Wales under company number: 8697082.

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