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Why long-range cash flow forecasts are so important for businesses

You've got your business plan, you've thought long term and know where you want to be in five years, but do you have a cash flow forecast? It's potentially more important. It's fantastic that you know creatively where you want to take your company, but a cash flow forecast will make sure you've always got the funds to get you there.

What is a cash flow forecast?

A cash flow forecast looks at all the money in your business. Both incoming and outgoing. It also looks at the market around you. Detailing any changes in the global market that are expected and how they could affect you. You’ll look at the key details of when money will come in, and know with confidence that you have enough available for any outgoings. It’ll also make you aware of any money you may need to borrow, how much and for how long.

Why is it so important?

Any business, from a small start-up, to a globally recognised brand, relies on money. To pay staff and suppliers, to advertise, for utilities and rent, the list is enormous. And of course, you need to be profitable once it’s all been taken out. A long-term cash flow forecast will help you see any problems you might face in the future. These might be simple things, like an invoice going out a day before a payment arrives. Or bigger things like a change in the market values, you have no control over. A cash flow forecast will help you not only keep on top of day-to-day expenses but also be prepared for the unexpected.

What should I do?

You can try to put together a spreadsheet yourself, but remember to include absolutely everything. Sit down and write a list of all money coming in, and leaving your business. Think about what these lists could potentially look like in a year's time. Then look into long-term projections of the market your business is in, do you need to take any potential changes into account? Is there a new firm setting up which will be a rival? Or perhaps you’ll be affected by changes in the global market? You need to know it all.

One key thing to remember, is to be realistic. This isn’t a plan of how much money you’d like to make if everything goes perfectly. Be overly optimistic and you’ll leave yourself short; your forecast will be worthless. If your forecast reveals you need extra help in the form of a loan, at least you know about it and can plan around it.

A long-term cash flow forecast could be the key to making your business a success. It’s vitally important to preparing you for any challenges that lie ahead, enabling you to make informed decisions to tackle potential problems. If you feel you need help with your cash management, it is available, and perhaps necessary to enable your business to be a success.

3 Nov 2016 18:36


About Boris Dzhingarov

Boris Dzhingarov graduated UNWE with a major in marketing. He is the CEO of ESBO ltd brand mentioning agency. He writes for several online sites such as,,, Boris is the founder of and