Using cash flow forecasting

Businesses use cash flow forecasts for many reasons. They can show whether enough money comes in each month to pay bills, but perhaps more importantly, they can show periods of high expenditure or low income.

Cash flow forecasts can be useful for obtaining loans as they demonstrate the business's ability to repay and enables businesses to monitor their planning – a business can compare the forecast to the actual situation, see how accurate the forecast was and refine it by the following year. The business can then set more realistic targets.