What is a Monthly Cash Flow Forecast

Cash in less cash out defines a monthly cash flow forecast. Adding available and unused cash from financing describes how strong the forecast is.

Calculating a Monthly Cash Flow Forecast

It starts with the bank B/Fwd. followed by monthly receipts from all sources less monthly cash out to arrive at the end of month bank balance.

There is also the matter of the balance of available cash from external financing such as the bank overdraft, cash from other loans and from factoring or supply-chain financing (if selected). These will have already have been calculated by Figurewizard and are applied to finish the monthly forecasts and to describe much free cash the business is expected to have in hand at the end of each month.

The Importance of a Monthly cash Flow Forecast

The job of the forecast is to confirm that the monthly cash position of your business is expected to be able to comfortably meet all of its liabilities, as and when they fall due.

That’s why deficits should never feature. If they do, your business plan’s projected figures for sales, margin, overheads financing and so on will need to change, otherwise you will be left forecasting a cash flow crisis.

A single deficit month could produce knock on effects that might seriously compromise the rest of your forecasts. More than one certainly will.

What Does it Look Like?

Click here to view a working example of a Figurewizard's budgeted monthly cash flow forecast.

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