Free Tool: Cash Flow Forecaster Template
Cashflow forecasting is rarely top of any business owner’s priority list. Most of us would rather spend our time doing something that has obvious and immediate payoffs – something that doesn’t feel like a chore.
Unfortunately, cash flow management is something that every business owner needs to take seriously. Arguably it’s THE most important thing in your business.
How do I create a cash flow forecaster?
Here’s the basic excel template I give my clients to get them started. Instructions are inside…
Why is having a cash flow forecast important?
It serves as an early warning system for cash shortfalls. If you know what to expect it buys you critical extra weeks to forward plan your sales strategy and cost cutting plan.
Dealing with unexpected cash shortages is stressful and scary. Not knowing how you’re going to find the cash to pay wages and supplier bills is something that results in sleepless nights and panic attacks. In extreme cases, lack of cash results in redundancies – or worse bankruptcy. Regrettably I’ve seen this happen on more that one occasion.
And on the other hand, building your cash flow forecast provides complete control over your financial future when times are good. It enables you to plan with confidence when you can hire your next employee or fund additional marketing campaigns.
I’m no good with numbers and spreadsheets
Cash flow forecasting is not difficult but often people are intimidated by the thought of numbers and spreadsheets. I’d fully recommend the use of a good bookkeeper, accountant or PA if you feel you want help.
I’ll never find the time to do it
Hopefully by now you understand the importance. In which case it’s probably one of two things holding you back.
Lack of Discipline – you tell yourself you’re going to do it but it keeps getting pushed back. Usually it’s lack of time management skills and diary planning that causes this. Here’s how to manage your time more effectively.
Procrastination – often business owners tell me things like “I can’t know exactly how much money we will collect in 3 months or what our overheads will be, so how am I even supposed to start?” Forecasting by definition can never be 100% accurate, but all you need is something that is roughly right – i.e. it gives an approximation of where future shortfalls or surpluses may be. 80% right is good enough to make key decisions. Almost every owner will have enough knowledge to create a roughly right forecast.
