Cashflow planning and forecasting enables you to predict peaks and troughs in your cash balance.
It helps you to plan borrowing and tells you how much surplus cash you’re likely to have at a given time.
Many banks require forecasts before considering a loan.
The forecast is usually done for a year or quarter in advance and divided into weeks or months.
In extremely difficult cashflow situations a daily cashflow forecast might be helpful.
There are a number of ways to approach this including zero-based budgeting, incremental budgeting, activity-based budgeting and rolling budgets. Each has their own advantages and disadvantages and I go through which method might be best for your business.
Template link: https://www.annetteandco.co.uk/cashflow-template/
In the above video I go through exactly how to complete the template so that you can also implement cashflow planning in your business.
- Costs that are linked to income eg stripe payments, cos, marketing spend
- Seasonal income
- Tax payments
- Payments to owner