Cashflow forecasting is very important because of these reasons, if a business runs out of cash and is not able to obtain new finance, it will become insolvent. Cashflow is the lifeblood of all businesses and most of all start-up business.
Five steps to preparing a simple cashflow forecast:
- Prepare the income or sales for the business
- Prepare details on any other estimated cash income
- Prepare details on all estimated cash outgoings and expenses
- Prepare your cashflow forecast by gathered the detail and putting it together.
- Review the estimated cash flows vs the actual
The three-way forecast, or 3-way financial statements is the model whereby we combine the three key reports into a consolidated forecast by linking your Profit & Loss (income statement), your balance sheet and the cashflow projections together. Enabling you to forecast your future cash position.