Something many business owners, even experienced owners, struggle to understand, is that there is a big difference between making a profit and having an adequate cash flow to allow your business to function properly.

A budget addresses profitability, a cash flow forecast looks at the timing of cash coming in and going out.

One of the biggest causes of business failure is insufficient cash. You can absolutely be making a profit, but still, go out of business due to a cash shortfall.

Cash is the oxygen of a business, without it, it can’t survive.

A cash flow forecast will help you understand the peaks and troughs you will experience in your cash balance. It also provides an understanding of just how much working capital you will need to inject into, and then retain in, your business in order for it to meet its requirements.

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