Your FREE cash flow forecast template

Tools & Resources

Key learnings

Effective cash flow management helps businesses remain financially viable.
You can work out your cash flow by subtracting your expenses from your revenues.
There are many things you can do to improve cash flow if your business is struggling.

Keeping a close eye on how much money you’ve got coming in and going out is the foundation of all business management. This is your cash flow. But simple as it sounds, it can be difficult to keep track of revenues and expenses when your business is growing. This is why we’ve put together this definitive guide to help you manage your cash flow more effectively - and a FREE template to help you.

Cash flow describes changes in how much money your business has available from one point to another.

Cash flow management is keeping track of this and analysing any changes. Analysing changes to your cash flow helps you spot trends, prepare for the future, and tackle any problems. 

It also helps you predict how much money is available to your business and enables you to identify how much money you need to cover debts such as paying employees and suppliers. 

It pays to practice good cash flow management to make sure your business has enough money to keep running. 

How to work out your cash flow

Cash flow is the difference between your total revenue (A) and your total expenses (B).

An example formula would be: total income (A) minus total expenses (B) equals net cash flow. 

Your cash flow forecast is an estimate of the money you expect to bring in to and pay out of your business over the coming 12-months.

A cash flow forecast needs to reflect all future activity you have planned for your business and should only show business revenue and expenses - not personal ones.

Make sure the figures you input into your forecast are realistic and you are able to back them up with evidence. It's important that your forecast aligns with your business plan.

Like business plans, cash flow forecasts are an important feature when looking for finance to start or grow your business.

Download your free cash flow forecast below.

How to manage cash flow

There are many ways you can manage your cash flow if you think you may need more capital in the future.

Here are some suggestions:

Cash in on assets - do you have equipment you no longer use or inventory that’s becoming obsolete? Consider selling it to generate quick cash. 
An up-to-date cash flow forecast is essential, particularly in a growing business. Make sure you understand the cash and working capital required to operate the business. 
Be proactive - start by looking at your current method for managing the money coming in or going out of your business, such as payroll, bills, purchases, and investments. 
Lease equipment – by leasing vehicles, computers, and other business equipment, you get access to the latest features and avoid tying up cash by buying them outright.  
Stay on top of invoicing - send invoices as soon as the work's completed or products are delivered. Find out the specific person, job title and address to send your invoices to so they don’t get lost in a shuffle from department to department. Speed payments up by offering deals. 
Consider offering your customers incentives, such as a percentage off the total, for early payments.  
Ask for deposits or partial payments on large orders or long-term contracts. For example, a builder or a designer may charge a 10% deposit upfront before creating plans for the project, half the remaining amount when work begins, and the rest of the balance upon completion. 
Delay payments to your vendors - Unless there’s a worthwhile incentive for you to pay early, figure out how late you can pay your vendors without risking late fees or harming your relationship. This keeps the cash in your account and out of your vendor’s until it must be there. 
Look at overheads – are there any bills you can look to reduce? Are you paying too much for broadband or energy supply?

As you can see, there are many things you can do to address cash flow issues in your business.

Cash shortages and other cost pressures affect every business from time-to-time, owing to the cyclical nature of markets where your products and services are sold.

The best advice is not to panic. Instead look at how you can reduce costs or increase sales in the near term.

To head off any potential cash flow issues arising, you can also plan ahead and keep some cash in reserve for a rainy day.

Download our FREE cash flow forecast template to help you manage you business finances more easily.

Next steps:

Download our template above to help with your cash flow forecasting:
Regularly calculate and review your net cash flow to understand the health of your business.
Look at your assets, overheads and upcoming payments if you run into cash flow issues.
Ready to improve your cashflow so you can focus on growing your business? UMi’s Free Cashflow Management Check can help you do just that. Simply fill out this Financial Health Check form and we'll be in touch to arrange a free 30-minute one-to-one session with an UMi Business and Investment Adviser.