Cash Flow Forecasting

In brief

A cash flow forecast looks similar to a set of financial statements, but rather than recording the past it seeks to predict the future by using historical trends combined with “assumptions” about the year ahead. Cash flow forecasting is a highly technical skill, and McCarthy Global Consulting’s modelling has been developed and refined over the years to the point where it is second to none.

Contribution to success

Done properly, cash flow forecasting is the closest thing to a crystal ball a business owner can possess. By drawing on historical trends, making educated estimates about changes in your market in the coming year, thinking about your specific KPI’s or strategies, and combining these into a document resembling a set of financial statements, it is possible to create a sometimes startingly accurate roadmap for your business. Having this document allows you to set financial targets for yourself and your staff, and measure progress against them on a monthly or quarterly basis.

Details

The term “cash flow forecast” is sometimes incorrectly thought of as being simply a forecast of your Profit & Loss statement. However, a cash flow forecast should actually include not only a projection of the P&L, but also the Balance Sheet and Cash Flow Statement. These forecasts are often called “3-way forecasts” or “integrated forecasts” by lenders and investors, and are being demanded more and more frequently as a prerequisite to approving debt or equity capital.

MGC’s cash flow forecasting template was first developed 10 years ago, and has been incrementally refined and improved ever since. It has been used by hundreds of businesses and has been adapted to suit a wide range of industries, from manufacturing to professional services to plant & equipment hire. It has been provided to, and accepted by, a wide range of business financiers, and in fact a number of them regularly refer their business clients to us to have this document prepared.

Next steps

Tell us about your situation and let’s discuss how MGC might assist. Contact us here or send us an email at enquiries@mccarthyglobal.com.au.