Do I Really Need A Cash Flow Forecast?

If you’ve ever found yourself lying awake at 3 am on a Monday wondering whether you have enough in the bank to pay your employees, your suppliers, or that pesky VAT bill I mentioned in my previous post - then yes, you need a cashflow forecast.

The idea might feel more frightening than a bungee jump without a rope, but really, it’s just a look ahead.

A cash flow forecast helps you estimate the money you expect to come into your business, and the money you know will be going out, over a given period. It doesn’t have to be complicated, but it does need to be realistic - and regularly updated - to be useful.

Even a short-term forecast — for example, three months — showing your current bank balance, expected income, and planned outgoings in a simple Excel spreadsheet can offer real clarity:

• Spot potential cash gaps before they cause problems

• Plan for larger expenses, or quieter periods

• Make decisions with more confidence

• Feel empowered and more in control of the road ahead

The great thing about forecasting is that once you have an initial template (even just in Excel) you can reuse it, simply updating the figures as you go.

Cash forecasting won’t give you all the answers, but it will help you ask better questions - and avoid those 3 am panics about whether there is ‘enough’.

Surprises in business are rarely fun - even the simplest cashflow forecast is better than none at all.