A cash-flow forecast is essential for new businesses.
With a cash flow forecast, you’ll be able to see which months you can expect to see a cash deficit, and which months you can expect a surplus. You’ll also be able to get a pretty good idea of how much cash your business is going to require over the next year or so to survive.
You can gain a lot of insight into your business by comparing actual figures to what you forecasted. If you see discrepancies between the two numbers, dig further to see what might be happening.
For example, if you discover that you are spending twice the amount you thought you were on electricity then you could look at the efficiency of your heating or other areas to save energy. If your telephone bill is much higher than you thought it was then you could look into the possibility of switching providers for a more competitive rate.
When discrepancies are found, you can adjust your forecasts so they are more accurate going forward.