The Basics of Cash Flow Forecasting
Created: Thursday, 29 January 2015 10:03
Cash Flow Forecasting
Whether you are a small business owner or freelance worker, you need an accurate projection of your income and expenses to make sure that you can stay in business. Cash flow forecasting helps you predict the amount of money your business will earn and spend over a fixed time period. It may sound intimidating, but actually the process is simple and has the added benefit of forcing you to keep good records.
Cash flow forecasting has multiple uses. It can help new businesses plan how much capital they will need for start up costs, help plan for projected fluctuations in income, and help business owners stay within their set financial limits. It is also an invaluable tool if you are thinking of expanding your business or moving in a new direction.
Cash flow reports typically reflect a monthly period, but you can make them for any time frame relevant to your business. You may choose to update your forecast more frequently during a large project or during a period when you predict that money will be tight. Some business owners find that weekly or even daily reports are useful during certain phases of their operations.
To create a successful cash flow forecast, the first step is to gather data about your business income and outgoing in expenses all in one place. The following tips will help you set up an initial cash flow forecast and create a tracking system that becomes more accurate with time.
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