At all times, but particularly at a time when so many business owners are experiencing the impact of rising costs and inflation, regular cash flow forecasting is essential.

Cash flow forecasting provides you with an insight into ‘expected’ future cash values, – i.e., money that your business may have or need – since it is typically based on amounts that you anticipate coming in and going out.

Forecasts give you an understanding of your viability, the affordability of any purchases you might be looking to make and can also be a crucial supporting document if you are approaching banks and lenders for funding.

Making this a regular activity can also help you to plan and circumvent potential cash flow difficulties before they arise and, whilst it may sound as if it could be an onerous task, it need not distract you from the day-to-day running of your business.

This is where cloud accounting software comes in, since the majority will have cash flow management features built in.

SAGE Cloud, for example, offer a cash flow forecast function which is included in both the standard and plus packages.

To use the function, within the summary tab there are two options to choose between:

  1. Cash flow statement – this shows you actual cash flow values for previous periods
  2. Cash flow forecast – this shows you a projection of predicted cash values in the future

You can generate a statement or forecast that focuses on a single bank account or that encompasses all bank accounts.

Using machine learning, SAGE will generate figures for expected customer receipts and supplier payments and will also calculate an estimate of VAT owed (if you are VAT registered).

You can make manual adjustments, to account for other payments that the software cannot factor in; for example, if you know that you are going to be making a large, one-off purchase.

The software also allows you to run and download a detailed breakdown of expected cash inflows and outflows; these reports can be exported to CSV or PDF, making it easy for you to review the information and share it with your accountant.

How can George Hay help?

Our cloud accounting experts in Bedfordshire, Cambridgeshire and Hertfordshire are here to help you explore what works for your business, and to ensure you are getting the most out of your chosen software.

If you’d like to talk to us about regular cash flow forecasting and how it could be a useful tool for your business, contact us today.

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