All companies need to do monthly cash flow statements andcash flow forecasts, at the end or the beginning of the month. The cash flow statement, which should be run by a bookkeeper or accountant, is the financial statement that shows how much cash is coming in to, or leaving, the company. It shows what the cash, or equivalent thereof, is being used for, and it shows how well a company is doing, including daily, weekly, and monthly operations; or, to the contrary, the loss a company is making on a daily, weekly, or monthly basis.
The cash flow forecast allows a company to predict what the future is going to look like and allows them to plan carefully for the upcoming months. The forecasts are based on history, experience, knowledge, old strategies, new strategies, global trends, current trends, past, future, and current sales, and anything that a cash flow forecast template reminds you to look at.
A business of any size may make use of cash flow forecast templates to help the bookkeeping process. Cash flow forecasts are vital tools when it comes to planning and making both short and long-term decisions. A cash flow forecast can be done by a bookkeeper or accountant. Not all companies employ bookkeepers, some get their bookkeeping done online, while others make use of software platforms where they can do their own bookkeeping and cash flow forecasts.
A cash flow statement should record the following information:
A cash flow forecast will highlight what your future expenditure is going to look like. It helps you make the right decisions, not based on what you hope is going to happen, or what you instinctively feel is going to happen, but on what, given your past performance and your current growth, or struggle, forecasts.
A cash flow forecast helps you to:
What you base your cash flow forecast on entirely depends on the level of your business. A simple business will have a relatively simple cash flow forecast. In comparison, a larger and more established business is going to have a cash flow forecast that is a little more complicated. You get to choose how simple or complicated you want to make your cash flow forecasts. As your company grows, so your cash flow forecasts need to grow.
Simply put, when working on your cash flow forecast, you should keep the following in mind:
It is often as a company gets bigger and starts growing, that you need to manage your cash even more carefully than before. If you have a bookkeeper or accountant, their job is to manage all aspects of your finances. If you do your bookkeeping online, the same applies. They manage all aspects of your finances. If you are a business owner, you need to stay on top of your finances, or be involved with the finance and accounting department. If you choose to use a bookkeeping or accounting software platform online, follow the advised instructions or simply download any one of ourcash flow forecast templates, fill-in the blanks and save. That’s it.
If you have been in business for a few years, then your cash flow forecasts are going to be based on the following:
It may be slightly difficult to do a cash flow forecast when you are a brand-new company. However, don’t let this scare you from. As a newfound business, you will have created a highly detailed business plan, worked out your strategies and goals, worked on your finances, and you will have a strong marketing plan which will help you work out your projected profit margins. Market trends are also going to come into it.
In other words, a cash flow forecast for a new company can include:
Your business goals with remain relevant when managing the finances of your business. If you list your goals when doing your cash flow forecasts,you keep sight of where it is you want to be heading and in which direction. Goals always give you impetus to do better, so it is important to have them.
The beauty of cash flow forecast templates is that they can always be revisited. Your business is something that you are learning about as you go along. Global trends change on a regular basis. Something that was looking bad last month might start looking positive next month. Your marketing might take time to get off the ground. You might choose to target new markets. Unexpected new clients could find their way to you. Obviously, these are things you need to strive for, but whatever the case, you should be revisiting your cash flow forecast throughout it all.
To keep your eye on the ball, we recommend you use cash flow forecast templates that are already designed, to help you hold on to your goals and keep track of your cash flow.
Remember that when you do a cash flow forecast, you are not looking at future invoices, you are looking at the actual cash you are expecting to come in. An invoice is not a cash injection. Only the cash is a cash injection. Cash flow means that actual cash is coming in and out. Cash flow forecasts need to be based on actual cash coming in and out.
Cash flow statements are different to balance sheets and income statements, and they are different to cash forecasts. A cash flow statement is current, and does not forecast future cash flow, whether incoming or outgoing. A balance sheet and an income statement both include sales made on credit. A cash flow statement is purely about the cash, whereas cash flow forecasts are about the future. A cash flow forecast highlights the potential of a business, and can see where the strengths are, and where any pitfalls may be.
A cash flow forecast allows you to make good decisions based on what the future is predicted to bring.
Customers do not need to pay you in cash, but they do need to pay you. Cash payments generally constitute:
If you go through all the above, and you are a new business, you can do your own cash flow forecast by using a cash flow template. We do recommend you use a ready designed template that makes it nearly impossible for you to leave something out. Having a successful business means there should be no omissions. There should be no gasps about the things that were not forecasted, good or bad, when they should have been forecasted. A cash flow template will help you record all the information required to complete such a crucial document.
When yousign upto Business-in-a-Box, you obtain access to over 2,000 documents and templates that will help you manage your financial statements correctly. Templates available for download include cash flow forecasts, cash flow statements, balance sheets, trial balance, income statements and much more. Create your account and scale your business today.