cashflow forecasts

• What is a cash flow forecast?

  A prediction of cash flow for a period
• What does cash flow represent?

  The movement of money in and out
• What is the typical duration for a cash flow forecast?

  Usually for a year
• What are predicted inflows in a cash flow forecast?

  Money expected to come into the business
• What are predicted outflows in a cash flow forecast?

  Money expected to go out of the business
• How is net cash flow calculated?

  Predicted inflows minus predicted outflows
• What does the opening balance represent in a cash flow forecast?

  The money at the beginning of the period
• What does the closing balance represent in a cash flow forecast?

  The money at the end of the period
• What are surpluses or deficits in cash flow forecasts?

  Money left over after inflows and outflows
• Why do businesses create cash flow forecasts?

  To know money inflows and outflows
• How can cash flow forecasts help identify efficiencies?

  By showing where money is coming and going
• What can cash flow forecasts help predict?

  Shortages and surges in cash flow
• How does cash flow forecasting feed into business decisions?

  It informs spending on hiring and investments
• What is the difference between forecasted and actual cash flow?

  Forecasted is predicted; actual is real
• Why is it useful to compare cash flow forecasts with actual cash flow?

  To track progress and highlight unforeseen issues
• What does actual cash flow refer to?

  The real money exchanged in the business
• How is actual cash flow calculated?

  Using concrete figures, not estimates
• What does a significant difference between forecasted and actual cash flow indicate?

  It shows how well the business is tracking
• What are the purposes of cash flow forecasts?

  • Identify money coming in and going out
  • Determine impact of timings of inflows and outflows
  • Assess positive and negative liquidity
  • Inform business decisions
• What are the key components of a cash flow forecast?

  1. Predicted inflows
  2. Predicted outflows
  3. Net cash flow
  4. Opening balance
  5. Closing balance
  6. Surpluses or deficits
• What are the implications of forecasted cash flow rarely matching actual cash flow?

  • Highlights the need for accurate forecasting
  • Indicates potential unforeseen financial issues
  • Suggests adjustments may be necessary for future forecasts