• New Wave Accountants

The Value of Cash Flow Forecasts: All You Need to Know

Updated: May 24, 2021

Running out of cash: while there is an ever-growing list of different fears that the average Australian business has, this one undoubtedly stands out the most.

As it has been shown over the years, having one’s business run out of cash can lead to disastrous results because of how dependent any set of operations can be on proper financing. In cases where businesses end up running out of cash and being unable to obtain finance, failure is especially imminent, and only one proper solution can counteract the risk of running out of funds: cash flow forecasts.

What are cash flow forecasts?

The best way to describe cash flow forecasts is that they’re a financial document that aims to estimate the amount of money you expect to receive into the business and expand during a certain period.

Typically drafted to cover the span of a year, quarter, month, or week, these documents are vital because they outline what’s going on with your business’s numbers. With the help of a well-built and well-monitored cash flow forecast, you’ll be able to answer any question about your finances.

Today, cash flow forecasts are regarded as one of the most important tools that any decision-maker can use to attain the necessary foresight for the best decisions made daily. When used correctly, these reports will make it easier for you to ensure that your weekly, monthly, and yearly financials remain healthy and solvent!

What do they do (and why are they even important?)

When it comes to understanding why you should start working on your cash flow forecasts and paying more attention to them, it’s important to look further into the value that it brings to the table. If you’re keen on taking your financial work to the next level, here are some compelling reasons you must start taking your forecasts seriously (or enlist the services of New Wave Accounting’s experts to help you):

1. They allow you to control your supply completely

Before the days of proper accounting regimen and polished practices, most businesses struggled to predict surpluses and shortages in their supplies, leaving them prone to profit and operations constraints.

With cash flow forecasting, you’ll be able to easily predict surpluses and shortages in your company’s finances, no matter how unassuming or hidden they may be. This means that you’ll be able to keep your inventory in check and better time your shipments or manufacturing processes so that you don’t miss out on key opportunities to sell!

2. They effectively help you plan ahead—for better AND for worse

Another way cash flow forecasting proves itself to be essential for any business’s operations is by providing the necessary insight for creating plans during best and worst-case scenarios.

When you have your financial records in order, you can begin to set limits and barriers that will signal whether your business is in troubled financial waters or close to achieving its goals. Using the same figures, you’ll be able to set target figures for either situation so that you can get out of a predicament or make the most out of a strong momentum for smoother operations!

3. They help you spot problems before they turn into major ones

One thing about financial problems in a business that any decision-maker should know about is that it’s possible to see them coming from a mile away (and stop them) if your records are in order.

Detailed financial forecasts require maintaining accurate records to make predictions and target figures over, and these same figures can show any underlying problems in further detail. In fact, at New Wave Accounting, we urge our clients to start monitoring their cash flow forecasts and accompanying reports more often because doing so saves time and money!


Among the different parts of your business’s financial operations that you’ll need to be more mindful of, your cash flow forecasting efforts are the most important when it comes to ensuring top-quality performance. By keeping up to date with your financial records and following a dedicated forecasting process, you’ll be able to secure a much-needed advantage!

We're a small business accounting firm on the Gold Coast that specialises in various services, such as company set-ups, outsourced bookkeeping and accounting services, and Xero consultancy. Get in touch with us today to see how we can help keep your business in peak financial shape!

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