Small business owners have to make difficult financial decisions almost every day. The level of responsibility and risk associated with these decisions can be a huge burden, but with the advent of cloud accounting and the availability of more sophisticated reporting, the accuracy and timeliness of smart information is beginning to help ease the stress. One area in particular that is helping is the availability of online cash flow solutions.

Cash flow forecasting is an essential tool for business planning. This two-part blog will focus on the main advantages of a cash flow forecast (Part one) and some of the things that we love most about the tool that we here at ABJ Solutions use, Float (Part two).

Understand the impact of plans and possible outcomes

For many businesses during this pandemic, the concern has been one dodgy supplier or one late payment, leading to a massive hit on your cash in the bank. Modelling alternate scenarios can help business owners understand how various situations will impact their cash flow, allowing them to easily plan for worst case scenarios and be ready for when they occur. Using scenarios to test different future situations can provide the peace of mind a business owner needs to confidently put plans in place.

Keep on top of overdue payments

Every business owner knows the struggle and pain of keeping on top of consistent late payers. Having insight into late payers and the impact they have on your cash position can alert businesses to the need for more effective credit control.

To address this, you could look into direct debit software such as GoCardless, and debtor chasing software like Chaser.

Plan for upcoming cash gaps

Cash flow forecasting allows business owners to anticipate cash gaps before they occur and cause them problems, also allowing time to put plans in place to avoid those cash gaps. Anything from reducing payment terms, to looking for loans and alternative finance can be vital steps towards closing that cash gap.

Manage surplus cash

It is rare for most businesses to see excess cash in the bank however, cash flow forecasting can help business owners know in advance when they’ll have surplus cash and understand why this surplus occurs – in those instances, business owners are better able to plan for what to do with the surplus such as reinvesting in new markets, or repaying debt.

Track whether spending is on target

Every business has revenue goals and targets that are time-sensitive and cash flow forecasting can help you understand exactly when and if you will reach those goals.

Forecasting allows business owners to see the breakdown and the impact of their budgets. Are you over budget or are you under budget? It also shows the movement of cash in and out of the business. Not only does this increase business efficiency, by reducing wastage, but it also increases the accuracy of your forecasting and therefore your decision making.

Invest time in good governance

Cash flow forecasting provides business owners and potential investors clarity on what the future of a business looks like. This helps increase trust and accountability between clients and investors, making it more straightforward to raise further investment if needed.

Good governance is vital to the success and longevity of any business, offering additional insight into the potential of a business, encouraging confidence and reassurance.

The difference between profit and cash flow

Cash flow forecasting enables a business owner to differentiate between two valuable financial metrics – profit and cash flow. Your accounting software can tell you how your business is performing via a profit and loss and a cash flow forecast is essential for you to understand your cash position in the bank at any time, under any scenario, allowing you to make robust business decisions.

Use an online tool

Building a cash flow forecast in a spreadsheet can take a lot of time and effort. However, using collaborative cloud-based software can often take the pain out of forecasting your cash and go a long way towards calming your fears.

There are a growing number of business platforms like Xero, making it easier than ever to integrate with forecasting software that will do the heavy lifting for them. The end result is a saving of time and money allowing invaluable, actionable and efficient planning.

Float for cash flow forecasting

Float can make forecasting far easier, and more visual, than a traditional numbers-heavy spreadsheet. Tracking budgets vs actuals, Float provides a more realistic view of cash – allowing business owners to understand their cash position at a glance, with the additional benefits of creating ‘what if’ scenarios.

Encouraging insight and confidence in financial planning, cash flow forecasting can help to ensure the prosperous future that every business owner wants.

I will expand on Float as a cash flow tool in part two of this blog, which I will post tomorrow.


It is more important than ever for business owners to understand their cash position and when funds will be short so that they can make the right decisions. Cash flow forecasting and using collaborative tools, such as Float, will go a long way to helping a business maximise its chances of survival and push forward to growing and realising its potential.

Let Us Help

If your business has a turnover of over $1 million, ABJ Solutions is offering a complimentary 1 hour meeting to help answer questions and model critical decisions with you. Get in touch with us today so that we can help guide you through these challenging times.