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Guest Post: Cash flow forecasting – the no.1 priority for businesses


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Cash Flow Forecasting isn’t just for the big boys and girls of business – it’s just as relevant for the SMEs of this world as it is for Startups.  Cash flow – put simply – is what comes into your business and what leaves it.  If more goes out than comes in then you will eventually run out of cash – and that means the end of your business!  All business owners should take a strong interest in looking ahead to forecast what their cash flow is likely to do over the coming days, weeks and months.

I personally use the analogy of the human body – the ‘heart’ being your cash flow.  Let me explain:  if you get ill or break a leg, it’s comparable to a period of not making a profit – in both cases it’s unpleasant, but both can recover and get better again.  However, your heart stopping will result in death just the same in business if you run out of cash although your business ‘death’ may be slower and much more painful!  This is why Cash flow forecasting should be your number one business management activity – look after the heartbeat of your business!

So, onto the ‘how’: this can be done in one of three ways – either by building your own spreadsheet, buying a software tool to download onto your PC, or signing up to a cloud-based forecasting tool.

  1. Spreadsheets work if you’re well-acquainted with them; you can identify and eliminate the inevitable errors and have the time to build a simple forecast – it will be time consuming to build, probably have limited features but comes with no financial cost.
  2. Purchasing cash flow forecasting software for your PC is an option – pay in full, up-front. However, consider that technology, constantly developing and changing, will ensure you are occasionally upgrading. This is likely to cost you more.
  3. Many businesses, aware of the future-facing technological shift in business tools, look towards the cloud. This would suit your business if you want something more than just a basic spreadsheet solution. Taking less time to get going and maintain, bursting with features, free upgrades and tend to cost as little as £10/month.
Simply Cashflow

Simply Cashflow

The frequency of your forecast depends on how close you’re sailing to the wind – if cash is really tight, daily cash flow forecasting is best for you. This allows you keep a close eye on cash going in and out. If you need to watch it a little less closely, weekly forecasting is better. If your cash position is comfortable and doesn’t venture near the ‘death zone’ then monthly forecasting is for you.

The message here is that whether you use your own spreadsheet, buy one or sign up to a cloud-based product, the important thing is that you do run a Cash Flow Forecast for your business – cash flow forecasting is not an option, to be forewarned is to be forearmed…

Alan McCafferty

Alan McCafferty

Alan McCafferty is the Founder & Chief Executive of Simply Cashflow, a cloud-based Cash Flow Forecasting Business Management Tool at  It simultaneously forecasts in all three, Daily/Weekly/Monthly, formats, contains a ‘What-if’ facility for scenario analysis – i.e. ‘what-if’ this happens or that doesn’t, what will happen to our cash position, forecasts up to 5 years, numerous predefined reports and graphs and starts at £10/month – contract-free.

10 comments on “Guest Post: Cash flow forecasting – the no.1 priority for businesses

  1. Susie says:

    Great blog, thanks for sharing. Love the “what if” scenarios

    • Glad you like it Susie, thanks for taking the time to read and comment.

      • Susie says:

        No problem Philip. I didn’t realise the URL of my company website would show against my name and i’ve misspelt it. :) Is it possible to remove or amend? It should be what this new comment states. Blonde moment!

        Found the blog on interns being paid or not interesting too, in fact, I’ll go comment directly on that one. Thanks again Susie

  2. […] RT @simplycashflow: check out our guest blog over at @flincauk "#Cashflow #Forecasting – The No. 1 Priority for Businesses"  […]

  3. Great article and really like your ‘heartbeat of the business’ analogy – makes it really clear leaving nothing to misunderstand. I’ve been using Simply Cashflow for the past year and love it, just wouldn’t live without now. My favourite parts are the Daily, Weekly & Monthly forecasting formats and the graphical reports – graphs speak a thousand words and gives the management team little to hide behind!!

  4. […] Over at tech blog, our very own Alan McCafferty wrote a guest piece entitled “Cash flow Forecasting: The No.1 Priority for Businesses.” – revealing why Cashflow Forecasting is so vital to businesses, the many ways it can be done, and when exactly you should do it. As Alan says, “to be forewarned is to be forearmed…” Read it here! […]

  5. Great article and really like your ‘heartbeat of the business’ analogy too!

    Many companies make great efforts to improve working capital & cash flow. The biggest issue is not failure but the ability to sustain any improvement. To sustain good working capital results it is necessary to embed the working capital ethos in the company. Some call this a “cash culture”. Where this “cash culture” is not created it is very likely that old habits will re-emerge very quickly. The second point I would make would be about transparency of performance. All too often there are multiple versions of the truth so managers will willingly waste time debating who has the best numbers and not focusing on how they can create colelctive improvement. The best tool that I have seen is called The Working Capital Manager by DiscoverEdge ( For anyone who is really serious about working capital, they need to ensure they can measure what they are supposed to be managing. This tool is simple and visualises working capital performance and the potentials to improve.

    CEO of Working Capital Channel (

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