Here are the steps you need to take to run a cash flow forecast for your business:
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Gather your financial documents: Grab any documents that show you how much money is entering and exiting your business in a given month; with accounting software like Wave, you can download P&L statements, balance sheets, invoice reports, tax reports, and payroll documents.
Find your opening balance: Your opening balance is the balance in your bank account at the start of a given month. This should equal the closing balance at the end of the previous month.
Estimate your receivables: Look at your financial documents and estimate how much money your business earns in sales and revenue each month.
Estimate your payables: Look at your financial documents and estimate how much your business spends on rent, utilities, bills, marketing, payroll, and other operating expenses each month.
Calculate your cash flow: Use your estimated receivables and payables to calculate your cash flow: Cash Flow = Estimated Receivables - Estimated Payables.
Add cash flow to opening balance: Take the cash flow you calculated above and it to your opening balance you found above; this will provide you with a forecast of how much money you’ll end up at the end of the month.