How to Improve the Accuracy of Your Cash Flow Forecast

In cash flow forecasting, your estimates are based on historical data. This means having accurate historical data is critical. Below are some tips for improving its accuracy:

• At the end of the week or the month, input your actual results or the cash that was received and cash spent. This will allow you to identify which items you got wrong in your estimates and evaluate why you got it wrong. This analysis may lead you to identify bigger issues and help you make adjustments to your assumptions.

• Carefully evaluate all of your assumptions. Just because it’s correct now doesn’t mean it will be true for the future. Go through everything, especially when it comes to sales and validate it.

• Don’t forget to include annual payments, loan payments, credit card debt payments, and estimated taxes.

• It’s almost impossible to forecast where your business is going to be longer than one year out. You’ll introduce more risk and greater uncertainty the further out your financial scenario models go.

Get Expert Help With Cash Flow Forecasting

Whether your business is growing, fighting for survival, or you simply want to run your business better, a cash flow forecast can help you make business-critical decisions that impact the financial health of your business.

To get expert assistance with your cash flow, chat with our team. Get in touch to book a one-on-one consultation with our advisors and we’ll work out a plan to help you keep more money in your pocket.