The Income|Outcome^® Contextuary

The Cash Flow Forecast is a projection of the cash flows, in and out, over a fiscal period of projection, to determine net cash balances at particular points in time. This identifies either the need for additional cash infusions or the opportunity to use excess cash elsewhere.

It is a tool for analyzing the timing and severity of your cash flow problems and allows you to address the following:

• If you are going to run out of cash.
• When you will run out of cash.
• How much cash you will need.
• How long you’ll need it for. There’s a big difference between being short $500 for two days, and being short $50,000 for six months.

After you have completed your strategic plan, you will want to know if it can actually work - whether you have the cash flow to support it. If you do not have the cash, you may go bankrupt, even if you have a profitable business!

Cash Flow Forecasts can also improve your ability to borrow. They give you advance warning of a cash crisis, so you know the best time to take out a loan.