Cash Flow Forecast

Cash flow forecasting is a powerful tool for small businesses and is vital to the survival for some businesses. The good news is that it doesn’t have to be complicated. There are just a few things that, after understanding makes the process easier.

The first thing to understand is that change in your cash position does not equal your net profit. Depending on your business you will have adjustments to your net income each month that are not cash transactions. For example, that depreciation amount on the P&L does not affect cash. Do you have prepaid expenses? Those, as they are allocated out over time do not affect cash. It’s these types of amounts that need to be ignored while forecasting your cash flow.

Another thing to understand is that as with any forecast, flexibility, and a realistic approach is needed. Realistic approach is simple, don’t forecast $100,000 in revenue or sales when you are averaging $20,000. The flexibility approach comes into play when as the months go on and you are comparing your actual to your forecast you make adjustments. In business, surprise expenses come up that you don’t expect. Hopefully, surprise income is the case, like that hurricane that spiked your retail sales.

Excel is a great tool for developing forecasts. I have developed a template that can be customized to your business. See below. If you would like a copy of it feel free to email me at

For more information or if you would like to schedule a consultation visit

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