Cash flow

Generating a cash flow forecast

Before you can advise your clients on how to adapt to changing conditions, you need a clear picture of the current state of their business. A cash flow forecast helps you determine how long clients can maintain business operations, given their typical patterns of bringing in and spending money.

You can then use the forecast as a planning tool to evaluate “what-if” scenarios, based on potential adjustments to revenue and expenses. Set a goal to create a three-month plan to keep your clients cash positive.

We created a cash flow planning template for you to use. Make a copy of the Google Docs spreadsheet.

Before you start, make sure all transactions are reconciled and the books are clean. To put together the forecast, you’ll need the data from a few QuickBooks reports.

  • Run a Profit and Loss report for the past three months to understand the average income and expenses for each month. For income, focus on the top sources of revenue. On the expense side, pay particular attention to payroll, rent, insurance, and marketing expenses.
  • Run the Open Invoices report so you’ll be able to see anticipated sources of cash.
  • Run the Unpaid Bills report to identify expected short-term cash outflows.

Next: Maximizing cash flow

Back: Cash flow playbook for accounting professionals

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