Cashflow forecasting
This Cashflow forecasting Info Guide shows you how to prepare a flexible and realistic cashflow forecast and how to monitor your cashflow position.
A Cashflow Forecast is a spreadsheet into which you enter your anticipated cash inflows and cash outflows for the next three months or for the forthcoming year in order to calculate your cash balance which will be either positive or negative.
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A Cashflow Forecast can also be used to support loan applications.
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Cashflow Forecast Example
|
| |
January |
February |
March |
Total
|
|
Cash inflow
|
|
Sales (incl VAT)
|
13,000
|
9,000
|
15,000
|
37,000
|
| Other receipts |
0
|
5,000
|
0
|
5,000
|
| |
| Total inflow |
13,000
|
14,000
|
15,000
|
42,000
|
| |
|
Cash outflow
|
| Purchases (incl VAT) |
3,500
|
3,000
|
4,000
|
10,500
|
| Payroll – net pay |
3,800
|
3,500
|
4,000
|
11,300
|
| PAYE/PRSI |
700
|
900
|
800
|
2,400
|
| VAT |
0
|
0
|
2,500
|
2,500
|
| Loan repayments |
5,000
|
5,000
|
5,000
|
15,000
|
| Other payments |
0
|
2,000
|
0
|
2,000
|
Total outflow
|
13,000
|
14,400
|
16,300
|
43,700
|
| |
| Net inflow/outflow |
0
|
-€400
|
-€1,300
|
-€1,700
|
| |
| Opening cash balance - start of month |
€1,000
|
€1,000
|
€600
|
|
|
Closing cash balance - end of month
|
€1,000
|
€600
|
-€700
|
|
| |
Remember!
- Forecast as realistically as possible the amounts of cash that you expect to receive into your business and the amounts of cash that you expect to spend for the next three months or for the forthcoming year in order to get an indication of how much money will be left over.
- Show your forecast on a week-by-week or month-by-month basis. This will help you to spot cashflow problems and take corrective action in good time.
Timing
When forecasting cashflow, it’s the timing of VAT-inclusive cash received or paid that is important, not when the transactions initially take place.
Remember!
A flexible Cashflow Forecast is an essential tool for putting you in control. The more realistic your estimates, the better your Cashflow Forecast will work for you!
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Keeping on top of your cashflow position requires ongoing monitoring from you or your book-keeper. Your Cashflow Forecast should be a living tool that is rolled on from one week or month to the next with actual information providing the new starting point to project forward.
Weekly / monthly Cashflow Forecast review
- Compare the completed period's forecast figures with the actual cash movements, and revise the cash balance into the next period.
- Update upcoming periods' forecasts in the light of more accurate estimates and changes in the business environment.
- Add future periods so that it becomes a rolling forecast.
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