Cash flow forecast

Question 1

What is a cash flow forecast?

Answer 1

Plan that shows how much money you expect your business or project to receive and pay out over a set period

Question 2

What is a cash flow forecast used for?

Answer 2

• Understand impact of future plans and possible outcomes
• Keep track of overdue payments
• Plan for upcoming cash gaps
• Manage surplus cash
• Track whether spending is on target

Question 3

Why is cash flow important for a construction project?

Answer 3

• Allows the client to gain an understanding of their financial commitment over the duration of the project and when they are likely to spend the money
• Can be used to estimate when external funding will be required
• Acts as a check against valuations and can give early indication of financial difficulties

Question 4

How does a cash flow forecast help a company remain solvent?

Answer 4

Cash flow forecasts can predict when a business or project has money to pay out and when money is coming in. This can highlight if the business or project will have negative cash flow, meaning they can do something about it in good time