Projecting your cash flow is essential. By forecasting ahead, you gain a clear picture of your financial position in the coming months, which allows you to take the right steps to protect your cash reserves.

Detailed forecasts also make it possible to test different scenarios, identify savings, and develop strategies that keep the business secure.

Staying on top of changing conditions

Forecasting is not a one-off exercise. Your cash flow should be reviewed weekly or at least monthly, depending on the size and complexity of your business. This regular check gives you time to address problems before they become critical.

For example, if a customer payment looks likely to be late, you can tighten credit control, chase invoices earlier, or agree staged payments to protect your position.

Modern tools like Float, Fathom, or Futrli connect with your accounting system and can automatically update your forecast when new invoices or expenses are added. This saves time and ensures the data you are working with is always current.

Strengthening your financial position

A forecast is only useful if you act on what it shows. If your outgoings consistently outweigh your income, you need to address both sides of the equation. On the income side, consider whether your prices reflect the value you deliver. A modest increase, communicated well, can have a big impact. Look at new revenue streams, such as offering a premium version of an existing service or introducing subscription-style billing to smooth income.

On the cost side, carry out a quarterly expense review. Cancel unused software licences, renegotiate supplier contracts, and monitor stock levels to prevent tying up cash in slow-moving items. If staffing costs are a concern, explore flexible hours, cross-training staff to cover more roles, or outsourcing specific tasks that don’t need full-time employees. Small adjustments can add up to a significant improvement in your forecast.

Preparing for the future

One of the biggest strengths of forecasting is the ability to model “what if” scenarios. Adjust the assumptions in your forecast to see the impact of a 10% fall in sales, a delayed client payment, or an increase in energy bills. This allows you to put contingency plans in place before problems arise. If a scenario shows a cash shortfall, you can line up funding early, when you are in a stronger negotiating position with banks or investors.

Alongside scenarios, build a rolling 12-month forecast. Extending beyond the next few weeks or months helps you plan for seasonal peaks, tax payments, or larger one-off expenses. This longer view makes your strategy more resilient and gives you confidence when making investment decisions.

Talk to us

Cash flow forecasting is not just about avoiding problems; it gives you the insight to grow safely and take opportunities with less risk. Call us on 01904 787 973 if you’d like support setting up a forecast that works for your business and puts you firmly in control of your cash flow.