Benefits and limitations of cash flow forecasting.

There are obvious limitations to cash flow forecasting. By its nature, forecasting is what a business thinks will happen, not what is really happening or has happened in the past. The person creating the forecast may be overly optimistic and show that more money is expected than is realistic.

External and internal events can be difficult to predict and can have a negative (or positive) impact on cash flow. For example, natural emergencies, accidents, illnesses and so on.