Cash Flow Forecasting

Cash Flow Forecasting used to gauge future liquidity needs and profitability. A projection of a company’s financial position in the future based on anticipated receipts  and disbursement over a period of time. If a business runs out of cash and is not able to obtain new finance, it will become insolvent. It is no excuse for management to claim that they didn’t see a cash flow crisis coming. It is essential that management forecast (predict) what is going to happen to cash flow to make sure the business has enough to survive. Cash flow is the life-blood of all businesses.