Will You Run Out Of Money? Cash Flow Forecasting 101

Will You Run Out Of Money? Cash Flow Forecasting 101

Cash Flow is king when it comes to running a business.  You can gross millions but if you don’t collect it for months and your bills are due in days you are in serious trouble.  So how do you predict if you are going to run out of money?  Do a cash flow forecast.  This can apply to both your personal budget or a business.  

You will need to collect a few pieces of information to help yourself create a cash flow forecast.

    • What are your weekly sales projections on a cash basis….meaning what will you be able to collect each week.
        • Review your accounts receivable report?  What do you collect each week
        • If you have daily sales reports from a point of sale system review those figures.
        • If you don’t have either check your bank deposit history for last year and see how much you put in each week last year.


    • What is your Cost of Goods sold on a cash basis each week?
        • This should be the easiest.  Your cost of goods sold is generally a set percentage.


    • What are your weekly employee costs?
        • Salary, hourly employees, and benefits should all be included.  Employer payroll taxes are generally 17 to 20% of your payroll.
        • You can review last years payroll reports if you have them.


    • What is your weekly overhead and administrative cost?
        • Check your statement of cash flows; or
        • Run a P&L by week on a cash basis.

Now just fill in your spreadsheet as pictured above.  Fill in your current bank balance and the spreadsheet will show you the rest.  Fill in as many weeks or months as you wish and see any cash shortfall before it happens.

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