For a business or individual, nothing creates more sleepless nights than not knowing what tomorrow brings. Many people lie awake at night worrying about things like future cash flow when a simple bit of cash flow forecasting can ease their worries and contribute to better sleep.
There are many different factors that affect cash flow forecasting. Considerations should be given to accounts receivables, accounts payables, dividends, and payroll to name a few. It is important to look at these figures and note any cyclical patterns and behaviors.
You cannot predict or forecast the cash flow situation for the next quarter without first examining the current situation and past situations. The reason for quarterly reports is that they offer a broader look at the company, and the income and outflow of money, more than a single month would. The more information you can provide to your management team, the better your chances of an accurate forecast for the next quarter’s cash flow situation. The larger your company, the more options and variables there are to include, which is why you need a professional cash management team to handle the forecasting, projecting and asset management.