How to forecast your cash flow

A Cash Flow Forecast is a projection of the cash you expect to come in and out of your business over a set time period. Keeping your forecast up to date can help you to proactively manage cash shortages and surpluses, stay on budget, pay your suppliers on time, and more. This article explains how to use Wave's free cash flow forecasting template.

How to forecast your business' cashflow

If you want to use Wave's free template, you can find it at the bottom of this article. (Alternatively, you can ask your accountant for help creating a format that works for your business.)

  1. Download the template, found at the bottom of this article. You can open it in Google Sheets or Excel
  2. Enter your figures into the relevant cells on the template. The green cells will auto-calculate based on your entries.
    Your forecast should match with your Chart of Accounts, so make sure the cell names match!

 

Update your forecast

Once you have set up the forecast template, you will need to update it on a regular basis (we suggest daily or weekly). Make sure to take into account your actuals (cash that has moved and cash that will move from an invoice or bill). This can be a bit time consuming, but it’s worth it to keep your forecast up to date!

A few tips:

    • The template lists a range of common options, but they may not all be applicable to your business. Simply add or remove items as necessary.
    • The template provides a 12 month forecast, and your figures will likely change in this time. Make sure to update your forecast as this happens.
    • Make sure that any predictions you make regarding your cash inflows and outflows are both realistic and supportable. If you're starting a new business, we suggest being conservative with the numbers you enter for the first few months.
    • If any of the numbers you enter result in a negative balance, the negative balance will be displayed in red. Ideally, you want to avoid negative totals or balances, so think about what you can feasibly change in order to achieve this.

 

You might not have a crystal ball, but now that you've learned how to forecast your cashflow, your bookkeeping future is looking bright!

Make sure to download the template right below this comment so that you can get started!