Budgeting Relations : Manual Cash Flow Forecasting Instructions

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Manual Cash Flow Forecasting Instructions:
A Cash Flow Forecast is a projection of the cash you expect to come into and out of your business over a set time period. Make sure you keep your forecast up-to-date!
BEFORE YOU GET STARTED:
To get started, just enter your figures into the cells on the template and all of the green coloured cells will auto-calculate based on your responses. If you are using accounting software, your forecast should mirror your chart of accounts, so adapt the names accordingly.
UPDATING YOUR FORECAST:
Once you have set up this forecast, you will need to update it on a regular basis (we suggest daily or weekly), taking into account your actuals (cash that has moved and cash that will move from an invoice or bill).
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Here’s why cash flow forecasting is important for your business, even if you’re not experiencing cash problems right now.
1. Proactively manage cash shortages and surpluses
Forecasting your future bank balance allows you to see when you may have a cash shortage that could cripple your business by stopping you from paying your staff, your debtors or yourself – and it gives you enough time to do something about it. By identifying a cash gap well in advance and taking action you could get better loan rates or be able to tighten up your payment terms to bridge the gap. As the saying goes, forewarned is forearmed.
However, the inverse can also be a problem. While having a cash surplus is great, when you’re not doing anything with it that money is gathering dust. If you can spot in advance when you’ll have excess cash in the bank you can make plans for it. Maybe you can invest in some new equipment, buy more stock, pay dividends or take on another project. Cash flow forecasting tells you exactly how much you can afford to safely invest in – or take out of – your business. So if you want advanced notice of changes in your cash position to give you time to react appropriately, you should be forecasting your cash flow.
2. Scenario plan for future ‘what if’ questions
Are you thinking of hiring new staff? Or working out a succession plan? Or bringing on investment? Doing a cash flow forecast with different

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