I spend a lot of time talking about cashflow, but how do you create a cashflow forecast for yourself? Where do you get the information from? What does it mean!

Here’s my guide to creating a worthwhile cashflow forecast for your business: How To Start Your Cashflow Forecast

It often feels difficult to forecast more than just a couple of months ahead: it starts to need a lot of assumptions which can make the exercise seem risky or even pointless.

However a good forecast that looks out over at least the next year will show up any risks you may potentially face in the future as you implement your business strategy. For example, if sales increase will you have enough cash to keep up to date with VAT payments? Do you need to be setting aside cash to pay your tax bill, which can seem a long way off.

This is especially important if you are thinking of taking on additional borrowing. Bank’s always ask for a cashflow forecast as part of an application; it’s not just a “box ticking” exercise it is a vital part of making sure you can afford the repayments!

This guide takes you through:

  • What duration and level of detail you need to consider
  • what to include in your forecast and where to find the figures
  • some of the difficult areas, such as forecasting VAT and tax
  • Some ideas of business issues to think about along the way


The most important part of the forecasting process is actually what you do with it once you’re finished. Do you need to find ways of plugging a leak in your cashflow, should you be borrowing to support new business growth, or should you be investing in the future?

With reliable information to hand you can make the right decisions to move your business forward.