The Cash Flow Forecast is the most important forecast; it is only concerned with projecting the flow of cash in and out of your business. It is critical to accurately estimate the income that your business will earn.
- Sales income will either be received in cash (immediate payment) or on credit (paid later). The two types of receipt will be dealt with differently in the CFF.
- You should build in contingency for the sales on credit. If you offer 30 days credit, sales might be prepared on basis of:70% in month 2; 20% in month 3; 10% in month 4
- Other incomes (selling fixed assets, receipt of grants or loans, capital etc.) will also be shown on the CFF
Cash Flow Forecast includes;
•The expenditure your business incurs will be analysed via a number of headings, such as:
–Light, heat and power
–Rent and rates
–Salaries and wages
–Capital expenditure (buying equipment)