Calculating and interpreting cash flow forecasts

• What is the importance of cash flow management for a business?

  It can prevent a business from failing
• What does cash flow represent in a business?

  Money movement in and out of a business
• What is cash flow forecasting?

  Predicting future cash flow in a business
• What is the typical duration for a cash flow forecast?

  12-month period
• Why is cash flow forecasting important for new businesses?

  It helps in planning for the future
• Which types of businesses benefit most from cash flow forecasting?

  New, fast-growing, and seasonal businesses
• How can a cash flow forecast assist a business?

  By making important decisions like hiring staff
• What risks can cash flow forecasting help identify?

  Risks of negative cash flow
• What challenges do new businesses face when creating a cash flow forecast?

  They lack previous figures for estimates
• What should entrepreneurs do after estimating cash flow?

  Monitor cash flow to check estimates' realism
• How can established businesses use cash flow forecasts?

  By comparing actual cash flow with forecasts
• What are cash inflows?

  Money coming into the business
• What are examples of cash inflows?

  Sales, rent received, and loans
• What are cash outflows?

  Money moving out of the business
• What are examples of cash outflows?

  Payments to suppliers, employees, and overheads