Cash flow forecasts PowerPoint Presentation

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					Cash flow forecasts
Cash flow forecasts predict…
 - Cash flow in
 - Cash flow out
 - Cash left
 …for a given period
 (usually a year)
Benefits of cash flow forecasting:
• Forewarns any cash flow
  shortfalls or peaks
• Helps business owners
  prepare for them
• Exposes debt collection
Cash is…
... any liquid asset…

…that can be turned into
cash to pay an urgent debt
Cash flow forecasting in 4 steps:
1. Identify cash in
2. Identify cash out
3. Calculate net cash
4. Adjust bank balances
Step 1: Identify cash in
Cash in can be…
- Cash sales
- Interest on savings
- Debts repaid
- Cash from a loan

… plus other types of
easily accessible income
Step 2: Identify cash out
Cash out can be…
- Purchases
- Utility bills
- Wages

… however, depreciation does
not count even though interest
counts as a “cash in” source
Step 3: Calculate net cash flow
Subtract “cash out”
from “cash in” to find
net cash flow

The equation is simple -
the hard part is
accurately identifying
the sources defining
the flow of cash
Step 4: Adjust bank balances
Add net cash flow to
bank balance for the
beginning of the month
to predict what’s going
to happen by the end of
the month
Just be careful…
At the end of every month
you can compare forecast
to reality

Just make sure you leave
the correct closing bank
figure in your records…
If you don’t future
forecasts will be inaccurate

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