Where the The Balance Sheet and the The Profit & Loss Account are primarily prepared for your 'actual' year end figures for submission to Companies House, the Cash Flow Forecast needs to be, some say, pessimistic as to your sales figure and expenses.
One problem we all face at some stage is preparation of a Cash Flow Forecast for the bank manager. It is 'almost' impossible to submit honest figures when you use pessimistic figures - when you look at the finished result you say to yourself 'I would not give anyone a loan if I saw these figures'.
However, I suggest you do use pessimistic figures and inform the lender that the figures are pessimistic, and as such, are very achievable. Returning to your lender 6 - 12 months after arranging a loan or overdraft facility, and asking for more funding because your original figures were way out, will not impress the lender.
Cash Flow Forecast ExampleThe example below evenly spreads out all costs. In reality, utilities, lease, etc are paid quarterly, some in advance, others in arrear. It is advisable to enter the proper amount in the month that the payment is due to ensure you are aware of the highs and lows of your cash requirements. However, the example below is a good tool for setting out your budget.In most cases, a business should forecast for a 12 month period. However, we have cut our example down to 3 months…just so that you get the idea. In addition, we have simplified the content (listings on the left-hand-side) to make it easier to follow and understand.All figures in £OpenJanFebMarchINCOME
Sales3,0003,0003,500
Capital In10,000TOTAL INCOME10,0003,0003,0003,500FINANCES / ASSETS
Loan Repayments100100100
Interest Paid101010TOTAL FINANCES / ASSETS110110110DIRECT COSTS
Materials150150200
Direct Labour300300350TOTAL DIRECT COSTS450450550EXPENSES
Salary100010001000
Office Rent100100100
Telephone100
Utilities100
Insurance100TOTAL EXPENSES1,2001,2001,200OPENING BALANCE*-10,00011,24012,480
TOTAL INCOME10,0003,0003,0003,500
TOTAL OUTGOINGS-1,7601,7601,860
NET CASH FLOW*10,0001,2401,2401,640ENDING BALANCE*10,00011,24012,48014,120
* Negative figures would be denoted by ( ) i.e. - £500 = (500)
The last five rows of the forecast are:
Opening Balance - This figure is the ending balance of the previous month
Total Income - This is the total income figure for the month (highlighted in blue).
Total Outgoings - This is the combined total of the outgoings (highlighted in yellow). In this case, we have three outgoing costs for each month (finance, direct costs and expenses).
Net Cash Flow - This is the difference between the total income and the total outgoings. It is worked out by subtracting the total outgoings from the total income.
Ending Balance - This is the ending balance at the end of the month. This figure is obtained by adding (or subtracting if it is a negative net cash flow) the net cash flow to the opening balance of the month.
How 'Credit' Will Affect the Cash Flow Forecast
If you offered, say, 1 month's credit to your customers, you would enter the sales figure in the month that you would be paid. For example, if a customer makes a purchase of £200 in January with one month's credit - you would include the figure in the February sales.
If you want to view a more detailed cash flow forecast, you can download our FREE spreadsheet (Excel) which you can edit and use in your business.
Forecast Figures vs Actual Figures
The following example is an effective method for recording forecast figures against actual cash. Most PC spreadsheet packages (like Excel) can be set up to your needs. I suggest you set up six months of forecast and actual, giving a total of twelve columns.NovActualDecActualJanActualFebActual
01. Open Bal(263)(263)(231)(224)(199)(90)(167)(92)
02. Total Cash In250260250255(250)(240)(250)(256)
03. Total Cash Out218221218210(218)(242)(218)(215)
04. Net Cash Flow32393245(32)(2)(32)(41)
05. Closing Bal(231)(224)(199)(90)(167)(92)(135)(51)
A cashflow forecast is very important in financial management. It plans the future cash requirements so the company can avoid going into a crisis of liquidity.
discounted cashflow method is used
One can find some mortgae forecast reviews online through financial companies who have financial advisors. One should bear in mind that a forecast remains speculative.
There are many good websites to monitor the stock market forecast. A few are Business Insider, Stock Market Outlook, Chartsedge, and The Market Forecast. All Are dot com websites.
It would not be an accurate cash flow analysis without all income and outgoing finance itemised and accounted for
A cashflow forecast is very important in financial management. It plans the future cash requirements so the company can avoid going into a crisis of liquidity.
Cashflow forecast
Spending Goals. Before you decide where your money really must go, you need to determine your goals.
Cashflow Technologies was created in 1997.
Cashflow is how much money you have after paying for Upkeep of your Glam.
Planware.org has a program called Cashflow Plan. It is a program that allows you to prepare monthly cashflow projections. Cashflow is a good program for tracking cashflow as well as planning your budgets and improvment plans.
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Money in, money out.
Cashflow describes the flow of cash between cash coming in and cash going out. The word Cashflow usually arises in businesses and its purpose is to influence the entrepreneur to ensure he/she has enough money coming in to cover monies going out.
Cashflow management
The weather forecast can be updated in real time, and you have easier access to the information. You don't have to wait until the weather forecast on the news station; you can check the forecast on your smart phone in seconds. You can also look up the weather in other areas of the world, and you're not limited to your own local weather station.
cashflow,incomesystemand balance sheets