Financial Reporting 201 – Cash Flow Forecasting

Cash Flow Forecasting

In our last blog titled Financial Reporting 101, we talked about the importance of having proper financial reporting and introduced two basic financial reports, the Balance Sheet and the Income Statement.

This month we will look at the cash flow forecast.  Cash is often referred to as the life-blood of an organization, so properly managing and forecasting cash can be critical to staying in business.

Below is a very simple cash flow forecast:

Beginning Cash Balance

Preparing a cash flow forecast begins with determining your current cash position.  As with producing most financial reports, it is important to first confirm that your books are reconciled to the bank.  The beginning balance assumes that any outstanding cheques have cleared the bank and all deposits have been made.  The beginning cash balance of one month is the ending cash balance of the previous month.

Cash Inflows

This includes accounts receivable collections received during the month, as well as any other cash received such as interest or dividends.

Cash Outflows

These are movements of cash out of the organization.  In addition to items such as payroll or rent, it also includes paying down credit card balances, and making loan or line of credit repayments.

Ending Cash Balance

This is the amount in the bank at the end of the month.   A negative balance indicates a need to increase cash inflows, reduce cash outflows, inject additional capital or borrow funds.   Strategies to manage or avoid cash flow shortfalls will be the subject of a future blog!

If you would like to learn more about cash flow forecasting, or you need help improving operating efficiency, reducing costs and strengthening your organization, please contact me at 613-727-1230 ext. 212 or

Richard MacNeillFCPA, FCMA, CMC, Dipl. T. is a partner at OTUS Group, a team of advisors to business, government and not-for-profit organizations.

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Richard MacNeill
President, OTUS Group | OTUS Group
Holding Certified Management Accountant (FCMA), Chartered Professional Accountant (FCPA) and Certified Management Consultant (CMC) designations, Richard is also a graduate of the British Columbia Institute of Technology, holding a diploma in Computer Programming and Systems Technology.
Outside of work, Richard enjoys spending time with his wife and three children, and training for obstacle races.

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