• New Wave Accountants

Cash Flow Forecast: How Important Is It for Your Business?

Cash flow plays such a big role in a business that it can dictate whether the company will sink or stay afloat. Having a strong cash flow plan could significantly make things easier for you as you have a steady source of funds that you can even use to expand the business. Because of how important cash flow is, it’s understandable that a cash flow forecast is equally essential.

If you are not familiar with it, you might wonder what the cash flow forecast is for. Well, you’re in the right place because, in this post, New Wave Accounting discusses all you need to know about cash flow forecast:

What a Cash Flow Forecast Does

In a nutshell, a cash flow forecast tracks the money that goes in and out of the company within a specific span of time, often at least six months. With this forecast, the business owner will be able to predict business peaks as well as upcoming challenges that are related to money and make sure that there’s enough budget for all the payables.

Apart from that, it will also help you better prepare for negotiations with suppliers, buy assets that you need, and manage both demand and supply.

Are Cash Flow and Budget the Same Thing?

Cash flow is different from the budget. The latter is done to predict a business’ performance within a certain timeframe, including non-cash items like depreciation and outstanding credits. This can also be used for tax planning.

Cash flow forecasts, on the other hand, are focused only on the state of your cash flow within a timeframe and don’t have anything to do with non-cash matters.

Basically, budgets will give you an idea of where you stand profit-wise, while cash flow tells you your cash position.

Cash Flow Forecast Tips

Here are some helpful tips on how you can do a cash flow forecast for your business.

Understand Your Customers’ Payment Terms

It can be difficult when you encounter customers who cannot pay straight away or in the full amount. It would be helpful to offer them payment options like cash on delivery and installment.

Don’t Delay Sending Invoices

When you make a sale, you need to send the invoice out right away. This will help both with bookkeeping and the tracking of your cash for your cash flow forecast. This is a better approach than the “end of the month” sending of invoices which can result in delays. When you choose to do the “end of the month” method, you might miss out on payments and end up disrupting the cash flow.

Offer Discount for Full Payments

If you want to entice customers to make full payments, offer them an incentive for doing so. For instance, you can offer a huge discount if they pay in full or offer them freebies.

Have a Deposit System

Consider having a deposit system for customers who want to make upfront payments. This can help you fund some of your expenses like wages and material costs.

Avoid Stocking in Excess

Although it’s a good idea to have ready stocks, doing it excessively can cost a lot. Not only that, but it could also mean not making money from those items for a long time. It would be better to maintain a good relationship with all your suppliers so that you can have your products delivered when you need them instead of having lots of them in stock.

Get Yourself a Reliable Business Accountant

Doing a cash flow forecast that works can be challenging. It is advisable that you work with an accountant with a solid reputation who can help you not only create accurate forecasts but also help you take care of the financial aspects of your business. This way, you can avoid issues like missing deadlines or spending more than your set budget.


The financial status of a business plays a big role in its success, and doing a cash flow forecast can help track your cash movement over a specific period of time. Who wouldn’t want to know about possible expenditures and be ready for anything? It doesn’t matter if you feel like you’re just starting out with your business. You can get the help of a small business accountant to help you with cash flow forecasting and other finance-related tasks.

If you are looking for a trusted small business accountant on the Gold Coast, New Wave Accounting is here for you. Our seasoned accountants have a clear understanding of what small businesses need and tailor our services to meet your specific needs. Contact us today and find out more!

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