1. Cash Flow Forecasts
Why prepare them?

2. 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.

3. 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.

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

5. 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.