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Monday, July 23, 2012

Cash Flow Forecasting

Cash Flow Forecasting is a prediction of the amount of money that will move through an organization. It is also known as cash flow budget or cash flow projection. The cash flow forecast identifies the sources and amounts of cash coming into the business and the destinations and amounts of cash going out over a given period. The purpose of good cash flow management is to provide a business owner with projected figures that were calculated to ensure the survival of a business and to achieve business targets.

An effective cash flow forecast can mean the difference between success and failure of a business. It enables to estimate whether will have sufficient cash to fund debts over a period of time. In the same time aid in projecting and using available funds in ways that best benefit the business. A cash flow forecast is important if paying out more than will receive in a particular period and highlights any potential cash flow crisis. By forecasting the cash flow of the business, it predict peaks and falls within cash flow and it also comes as a help to if ever need to approach a bank concerning finances


    Saves substantial time and money

    Gives control

    Enables forward planning

    Powerful and expandable.

    Motivating targets for everyone to work towards achieving

    Provides a an accurate monthly cash flow forecast

    Able to specify times when business may need additional funding

    Means of measuring performance

    Inconsistencies in performance can be identified, predicted and remedied

    Major new investments can be bedded in and accurately assessed

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