A cashflow forecast is an estimate of the amount of money you expect to flow into and out of your business. The best type of cashflow forecast is a 3-way forecast as it look at the relationship between your profit and loss (income statement), balance sheet and cashflow projections together so you have a clear picture of both your future cash position, and the financial health of your business. Cashflow forecasting is best done as a regular activity to understand how changes in your business conditions impact your future plans