Cash Flow


Managing your cash flow is vital for business survival and growth. To run your business effectively you need to balance the timing and amount of your costs with those of your income. Cash flow forecasting enables you to predict peaks and troughs in your cash balance.

On a typical cash flow forecast, the projected turnover for each month is shown at the top of the form. This should match the figures generated by the sales forecast. Underneath, all the expenses due to come out in that month, and any drawings you plan to take, are also listed. The surplus or deficit for each month is calculated and the effect of the surplus or deficit on the business bank account is shown. If there is an unworkable deficit predicted then you can see if you can come up with a more favourable plan perhaps by securing loan or overdraft facilities; by cutting costs; or by altering the timings of purchases.

 It is normal for bank loan providers or investors to request a 12 month cash flow forecast along with your business plan. See

Sources of Funding Costs