Cash Flow Forecast Template
What is a Cash Flow Forecast?
A cash flow forecast estimates the future inflows and outflows of cash for a business. It can help a business plan for upcoming expenses and ensure enough money is available to meet its obligations.
The forecast is typically created annually, monthly, or quarterly, and it can be very helpful in managing cash flow. To create a cash flow forecast, businesses need to track their current inflows and outflows of cash and make assumptions about future sales and expenses. With this information, businesses can develop a realistic picture of their future cash needs and plan accordingly.
At Business Accounting Basics, we understand the importance of reviewing your cash and ensuring there is enough for business activities. Therefore, we have created a cash forecast template available for free download. We also include a complete example and instructions to help you get started.
Accounting Software for Cash Forecasting
Although using an Excel template might be suitable, it is worth considering accounting software as an alternative. Two popular options for accounting software are Xero and Quickbooks. These programs allow users to easily input and track real-time financial data, such as income and expenses. They also provide forecasting options, keeping your accounting all in one place and updating the forecast with actual figures.
How to use a Cash Flow Forecast Template
A cash flow forecast is an essential tool for any business. It can help you track incoming and outgoing funds, anticipate shortfalls, and make informed decisions about allocating your resources.
Several templates are available online, but the basics of forecasting are always the same.
First, gather all of your financial information for the month, including sales revenue, costs of goods sold, operating expenses, and any other income or expenses. Next, input this information into the template.
Most templates will have pre-set categories, but our template allows you to set the categories for your specific needs. Once all the information is entered, the template automatically generates a forecast for the month or year.
It will give you a clear picture of your cash flow situation and help you make informed decisions about allocating your resources.
Tips for creating a successful Cash Flow Forecast Template
1. Review your current financial situation
Before forecasting your cash flow, you must understand your current financial situation. This includes tracking your income and expenses for the past several months and knowing your business’ sales trends.
2. Use historical data to make assumptions about future cash flow
Once you understand your current financial situation, use this information to make assumptions about future cash flow. This will help to create a more accurate forecast.
3. Make sure all income and expenses are included in the forecast
To develop an accurate picture of your future cash flow, including all income and expenses in the forecast. This includes not only regular monthly expenses but also one-time or irregular expenses
4. Anticipate changes in revenue and expenses
Businesses can’t always predict when their revenue or expenses will change, so it’s important to anticipate these changes in the forecast. This will help you stay prepared for any fluctuations in cash flow.
5. Reconcile actual results with the forecast regularly
The best way to ensure that your cash flow forecast is accurate is by regularly reconciling actual results with the forecast. This will help you to identify any areas where the forecast is inaccurate and make adjustments accordingly
Following these tips, you can create a successful cash flow forecast template to help you manage your business’ finances effectively.
4. Benefits of using a Cash Flow Forecasting Template
A cash flow forecasting template can be valuable for any business owner. By creating a forecast, businesses can better understand their incoming and outgoing cash flow and make necessary adjustments to ensure they always have enough cash on hand to meet their obligations.
Forecasting can help businesses plan for significant expenses, such as equipment purchases or expansion projects. A cash flow forecast can also give business owners peace of mind by providing a clear view of their financial situation. With all these benefits, it’s no wonder that more and more businesses are using cash flow forecasting templates to help them stay on top of their finances.
Using a template already provided online will save time in setting one up yourself. The developer should have tested it to ensure that the additions are all correct. If you are new to Excel, setting up templates is a steep learning curve.
How often should you update your Cash Flow Forecast Template?
Many businesses use a cash flow forecast template to help them track and predict their short-term cash flow. Depending on your business’s size and complexity, you may need to update your template weekly, monthly, or quarterly.
Updating your template more frequently can help you better understand your current cash situation and make more informed decisions about spending and saving. However, more frequent updates may require more time and attention to detail.
Ultimately, the frequency with which you update your cash flow forecast template should be based on your specific needs and resources.
Where to get help with creating a Cash Flow Forecast Template
While there are many places to find templates online, including our free version. Ensuring that your chosen template is suitable for your business is essential. Talk to your accountant or bookkeeper about what information should be included in your template, and consider whether you need an accounting software program or an Excel spreadsheet.
An accountant might even have their own template available; if you don’t have the time, they can assist you in preparing a forecast. With some planning, you can find the right template to help you manage your cash flow and keep your business on track.
Where to get all the information to enter into a cash flow forecast
1. Start with your income. This should include all revenue from sales, services, interest, investments, and other sources. The figures are the net sales (no sales tax); if you expect any tax refund, include them.
2. Next, list all of your expenses. This should include fixed expenses, like rent or mortgage payments, and variable expenses, like utilities or inventory costs. Don’t forget to add dividend payments and tax payments.
3. Finally, identify any one-time or irregular expenses you expect to incur over the forecast period. This could include significant equipment purchases or expansion projects.
There are three primary resources to collect the figures from, including:
Income Statement
The income statement is the most vital information when forecasting cash flow. The income statement tells you how much revenue a company has generated over a period of time, as well as how much the cash paid out for business expenses is.
The information can help you predict how much cash a company will have available in the future. You can also use data from the income statement to predict how much money a company will spend in the future, which can help you create a more accurate cash flow forecast.
Balance Sheet
The balance sheet can be a valuable source of information for forecasting cash flow. By looking at the bank balance, creditors and debtors on the balance sheet, you can know how much cash the company has and will receive or spend in the future.
Bank Statement
The bank statement can be used to forecast regular payments, such as direct debits and standing orders. The statement shows the date of the payment, the amount, and the type of payment. This information can be used to create a schedule of regular payments that can be used to plan future expenses.
Once you have all this information, you can input it into your cash flow forecast template. Remember to update your template regularly to reflect your current financial situation accurately. With some planning and foresight, you can use your cash flow forecast template to keep your business on track.
Free Business Accounting Basics Cash Flow Forecasts Templates
We have created annual, weekly, and daily templates to help track your small business cash flow.
All the templates follow the same format, with cash receipts at the top and cash payments below. The bottom rows show the bank balance brought forward, the cash inflow and cash outflow and a balance carried forward.
Instructions for Cash Flow Forecast Use
To complete the Company’s cash flow forecast, follow these simple steps.
- Decide which template you require and use the free download at the end of this article.
- Either enter the start date for weekly or daily. On the monthly version, change the months.
- Enter the opening bank balance on the first balance b/f
- Create the best income and expenses categories and name them
- Enter the projected income, and make sure you include cash receipts
- Enter the cash outflows for both variable costs and fixed costs
- All the balances are automatically calculated and will show the projected cash flow, which is the opening balance plus all income, minus expenses, leaving a net cash flow.
- If you use the weekly or daily cash flow, change the balance b/f when you start a new week or day for the actual bank balance.
Licence Agreement for Business Cash Flow Forecast Template
By downloading the Cash Flow Forecast templates, you agree to our licence agreement, allowing you to use the templates for your own personal or business use only. You may not share, distribute, or resell the templates to anyone else in any way.
Annual Cash Flow Forecasts Template
Our first template is for cash flow projections for a year on a monthly basis. This is required for a business plan or by banks for loans and overdraft facilities.
Weekly Cash Flow Forecasts Template
Our second template is for cash flow projections weekly, split by week for three months. This is suitable for small business owners that need to track cash on a regular basis to check their financial situation regularly. It is required if a small business is near its overdraft limit.
Daily Cash Flow Forecast
Our final template is the daily cash flow forecast for 14 days. It is only needed by small businesses if they are very tight on cash, and the situation might change daily.
Forecast Example
Download our free example; it is a forecast for one year for a computer hardware business.
Cash Flow Forecast FAQ
Why do I need a Cash Forecast?
It will show different figures to a profit and loss account. A profit and loss might show a profit for one month, but due to delays in collecting cash, there might not be enough cash to cover the expenses. This information can help business owners plan future expenses and stay on track financially. It can also be used to obtain loans or overdraft facilities from a bank.
How do you Create a Cash Flow Statement?
The easiest way to create a statement is in Excel using a free template, but if you are experienced in Excel, you can easily create one yourself to fit your small business needs.
Can I make Changes to the Cash Flow Forecast Template?
We have left the templates unprotected so you can add rows and columns to extend it.
I’m a new business; how do I get the figures?
As a new business, it is harder to collect the figures but estimate them and note why you have come to the figures.
Are there alternatives to using Excel?
Some of the best accounting software includes cash forecasts. We recommend Xero, QuickBooks or Sage. By using accounting software, you already have the actual figures available, so it helps with the complete process.
Cash Flow Forecast Template Conclusion
Forecasting your small business cash flow can seem daunting, but it can be a relatively simple process with the right tools and information. We’ve provided a few helpful resources to get started, including free templates for annual, weekly, and daily cash flow forecasts.
With these templates, you can easily track your company’s income and expenses to have a realistic picture of your current financial situation. Stay ahead of the game by planning for future expenditures and keeping tabs on your regular payments using our helpful tips.
