Cash Flow Forecasts Why prepare them?.

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Presentation transcript:

Cash Flow Forecasts Why prepare them?

ID times of cash shortages and surpluses Closing monthly balances will help to identify if an overdraft is required, or if there is a cash surplus that could be used elsewhere in the business.

Supports applications for funding Banks may insist on seeing a c/f forecast when deciding on a loan. A c/f forecast can help to show the future outlook for the business. This can reassure lenders & investors. Very helpful when setting up a new business.

Improves planning A c/f forecast helps managers to plan the future activities of the business

Monitor cash flow Managers can compare actual cash flows with what they expected (ie in their previous c/f forecast). This helps to identify problem areas that may need looking at if there are large differences.