How to get the most out of a cashflow forecast

27 July 2021

How to get the most out of a cashflow forecast


Online Accounting,

Outsourced Accounting

It is not an exaggeration to say that cashflow is crucial for any business. It is the lifeline of your business and one of the most important indicators for tracking your business’ health.

A forecast that has a close eye on your current and future cashflow should be a key part of your toolkit as a business owner, especially in today’s ever-changing environment.

What is a cashflow forecast and why is it important?

By using your business data, a cashflow forecast helps you to predict your business’ financial future.
If your business is going through a period of growth and you’re looking at your next steps, a cashflow forecast is an excellent tool to help you map out your next move and shape how to think about expansion, whilst also helping you to avoid stretching your finances too far.

A forecast can also ensure that your business has a financial buffer, so you can cope with an unexpected expense or gaps in your funding. If you think you won’t be self-sustaining during this gap, you can then forward plan by cutting costs or looking for additional funding.

Make sure you have an accurate picture

Whilst a forecast is a great tool to use for making strategic business decisions, it’s only as good as the data it’s based upon.

Really drill down into your data, understand where your money is coming in from and going out to, and make sure your recordkeeping and financial data is in order and up to date to get the most accurate picture possible.

Map out difference scenarios

Even with the most meticulous planning, it is impossible to know what the future holds. So, creating different forecasts for your best and worst case scenarios will help you work more proactively, lessen your chances of facing any nasty surprises and will allow you to adjust your plans and targets accordingly.

Add-on cloud accounting apps such as Fluidly can help you tap into this, by easily allowing you to change your payment due dates and enter future in/out flows whilst testing different scenarios. You can enter the associated costs of hiring a new team member or investing in new equipment, and you will immediately be able to see how this will affect your bank balance further down the line. Ultimately, this will enable you to identify any pinch points and make business investments more wisely.

Maximise cloud accounting apps

There are several cashflow tools on the market, but cloud accounting app, Fluidly is great for cashflow forecasting, as it is an intelligent forecaster that helps you plan for any eventuality.

Rather than taking the time to maintain a cashflow spreadsheet and manually update it with new data, Fluidly can do this almost instantaneously, by connecting to your cloud accounting software.

Having a real-time overview of your financial situation means that you can make quick and well-informed business decisions.

Helping you with your cashflow forecast

By helping to inform your decision making process, a clear and thought out cashflow forecast can make a huge difference to your business, especially in these uncertain times.

Whether it’s helping to create your forecast from the ground up, providing a fresh pair of eyes to spot opportunities and identify issues, or making sure you’re getting the most out of your cloud accounting apps, our team are on hand to help.