You're on the USA site →

Log in

Cash flow forecasting

Grow your business, with numbers you can trust.

Start your free trial today

Cash flow forecasting for your business

Grow your business with cash flow forecasting and identify cash gaps and surpluses before they happen. Figure out exactly how much money your business has, how much money it could and should have, and how you can use that money to make your venture a success.

82% of companies go out of business because of poor cash flow visibility and management. Knowing your cash position is essential to understanding your business’s numbers, staying on top of the flow of cash, and making the right decisions to help your business grow.

What is cash flow forecasting?

Think of a cash flow forecast as a plan of when cash will come into and out of your business. It shows you how much (or little) money you’ll have in your bank account at the end of each month.

If cash is the lifeblood of your business – then cash flow management is the process of keeping your business’s heart beating.

Cash flow forecasting is vital for business success

Cash in your business is not a static number. Money flows in and out of your business all the time. Outgoing expenses, incoming payments, bill timing, and business fluctuations – these all impact your bottom line.

But it’s more than having money in the bank. Good cash management is the key to securing your business’s future. Having a clear insight into your future cash position helps you effectively plan for and manage any financial situation.

Does my business need a cash flow forecast?

Knowing that you have the right money at the right time helps you be proactive in your business. Introducing a forecast into your financial management systems gives you the ability to predict problems before they happen. Helping your business grow at a sustainable rate.

Success starts with planning. Sales increases, lost revenue, unexpected costs, new hires, or seasonal fluctuations are easily planned for when you use a cash flow forecast. A real-time forecast that integrates with your accounting software can help you see upcoming gaps that your spreadsheet would have missed.

The benefits of cash flow forecasting

There are many ways a cash flow forecast can improve your business today:

  • Prepare for cash shortages or surpluses
  • Scenario plan for the future
  • Track spending and stick to budget
  • Make sure you pay suppliers on time
  • See the impact of late payers and improve credit control


From keeping track of overdue payments to foreseeing upcoming cash flow gaps, there are numerous advantages to cash flow forecasting. Find out more by reading our article on the 7 advantages of a cash flow forecast.

There are two main methods for calculating a cash flow forecast, known as the direct and indirect methods. The direct method is ideal for short to medium-term planning, while the indirect method uses your P&L combined with your balance sheet for a longer-term forecast. Want to know more? Read our article that explores the differences between direct and indirect forecasting to learn more.

In Float, our scenario planning tool helps you build potential ‘what if?’ situations into your cash flow forecast. This means you can plan for important business changes like moving office or hiring a new employee. Find out more about scenario planning.

When it comes to budgeting, a profit and loss or a balance sheet will give you a snapshot of what is happening right now, it won’t show you the future in terms of the cash you will actually have. In other words, it won’t be ‘real’. With a cash flow forecast that has been updated with your actual financial data, you can compare your best guess to what really happened, helping you see if you need to update your forecasts.

A cash flow forecast that takes into account invoices for your debtors and bills from your creditors will help you more easily identify who is consistently paying you late. You could go a step further to model different payment dates on overdue invoices to see the true impact of late payments on your cash flow.

The best way to improve your cash flow forecast is to make sure everything in your accounting software is kept up to date. As Float automatically syncs with Xero, Quickbooks and Freeagent, you can then update your cash flow at the click of a button.

Some people still use a spreadsheet to keep track of their cash flow forecast, which doesn’t update automatically.