Do You Prepare A Cash Flow Forecast For Your Business?

HMRC closes offices

If you ask business owners whether they prepare a cash flow forecast for their business the vast majority will answer no. There are many reasons for this, they are too busy, don’t think it’s important or don’t know how to put one together.

The famous phrase of “cash is king” is very true. You can be a profitable business but lack the cash to pay your bills. This can put the business into serious financial difficulty and can even cause it to go into liquidation.

Common reasons for cash problems include your customers paying you later, or not at all and you forgetting to budget for tax payments including corporation tax and VAT.

The simple way to remedy this is to prepare a cash forecast.

A cast flow forecast is a spreadsheet which forecasts the cash inflows and outflows each month. This isn’t sales or purchases but actual cash coming and coming out of the business.

By preparing a cash flow forecast you are able to identify months where there are potential cash difficulties. Identifying these difficult months’ means you can then prepare for this by reducing the business expenses or arranging an overdraft in advance.

Taking this proactive approach to financial planning can help secure the future of the business, aid strategies and identify surplus cash for growth.

If you would like to put together cash flow forecasts we are happy to help by sending you out a template. If you would like a template please contact us via email at

Leave a Reply