Your Definitive Guide to Cash Flow Forecasting

Cash flow forecasting has never been more important. This financial management tool helps to see where your organization’s cash flow will be for months into the future. During uncertain times, like now, cash flow forecasting could save your business. Here is your definitive guide to cash flow forecasting.

Cash flow forecasting has gotten a bad reputation for being notoriously inaccurate. In truth, the numbers you get out of your cash flow forecast are only as good as the numbers you put in. Having top of line financials is vital to the success of your company’s forecast. 

So how do you improve the accuracy of your cash flow forecasting? 

For starters, you must have accurate reporting. Accurate reporting is the backbone of a solid cash flow forecast. With strong, clear transactional numbers to accurately forecast where your company is headed, you can get numbers you can trust and make accurate business decisions into the future based on those numbers.

Next, consider your cash inflows. When it comes to both inflows and outflows accuracy is everything.  Take a look at your customers and how quickly you will be able to collect from them. Consider the timing of AP vs AR, are you optimizing that relationship to optimize your cash flow?

Finally, consider your cash outflows. Ensure you have people looking into your historical bills. You can use these bills to inform your plans over the next few months. Be sure to consider bill due dates to factor into your forecast.

At TGG, we use a 13-week cash flow forecast updated weekly with your actual numbers. When you update your forecast regularly, you get a more accurate representation of where your business stands. Then you can identify consistent patterns and adjust your business plan accordingly. 

At TGG, we believe in the power of Cash Flow Forecasting. Want to learn more? We’ve created TGG University to help you become better equipped to thrive financially. Check out our Cash Flow Forecasting course for only $99!

Take a look at a finished cash flow forecast in the video here:

Your guide to cash flow forecasting

This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.

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