The Basics

Estimate Revenue

The first step to cashflow forecasting is to estimate your revenue (money coming in) for the next three months. You can break this down to months or weeks depending on your business and what makes more sense for you.

Be careful to think about the timing of your cash. Do you get paid when you make a sale, or do you get paid two weeks later? Timing is important.

Estimate Expenses

·      List all your main expenses (e.g., rent, electricity, raw materials).

·      Think about how much you will spend on expenses in the next three months.

·      Again, think about timing. When do you pay for your expenses?

Count Your Cash

How much cash do you have at the moment?

Do the Calculations

·      Your cash + revenue – expenses = cash at the end of the month/week

·      Keep your calculations updated to make sure you always have enough cash to survive.