A cashflow forecast is an important tool for any business. It shows where and when your business is getting money in and when it is paying out money for bills, wages and other expenses. You need to plan for any cash shortfalls, but it also helps predict when you can take advantage of extra cash for investment opportunities.
Compared to a profit and loss statement, a cashflow forecast shows every detail of money coming in and going out and ensures you know how much cash you have at every moment.
Planning ahead is something banks and lenders appreciate. For mortgage applications, you must be able to show any lender that you can afford to make your scheduled mortgage repayments. Lenders will want to see well-considered cashflow forecasts for at least three years.
To help your planning, we’re providing some free cashflow templates for:
- Farm businesses
- Kennels and catteries
- Equestrian businesses
- Holiday accommodation, camping, or glamping
Simply click on the link below and the sheet will download.
Our top tips for creating and using cashflow forecasts:
- Be realistic and/or err on the pessimistic.
- Show assumptions and commentary (on the fourth tab of our spreadsheet) that clearly demonstrate how you have reached your forecast.
- Forecasts need to correlate with the track record of your existing business (if you have one) and be in line with your past accounts - and even better, updated management accounts.
- Create different scenarios for good or bad seasons or years and how that might affect your bottom line.
- Use your cashflow forecast regularly as a business monitoring tool. It should not just be used as information for lenders.
The team at R&BS understand what banks and lenders want to see in cashflow forecasts, and can help you prepare and place your lending application with the most appropriate lenders. Please give us a call or email us.