How to forecast a company’s cash flow?


In the day-to-day life of small and medium-sized companies, it is normal to encounter daily commitments that prevent them from analysing and strategically managing the business’ cash flow. Lack of time for efficient financial management can lead to many unnecessary costs, deviations, liquidity problems and errors in strategic decision making. How to forecast a company’s cash flow in order to improve results?

Often it is not a question of having a great deal of technical knowledge or too much time, but rather a question of finding the key aspects and relying on specialists if necessary.

3 pillars for a company’s cash flow forecast

These are just some of the keys that can provide the basis for the starting point on which to begin to optimally manage the cash flow of the business.

1. Cash and liquidity management

Treasury work must include cash management, as well as the ability to analyse, manage and forecast:

Cash flow

The cash conversion cycle

Inventory levels if the company sells physical products.

Also, the key is to have mechanisms, protocols, and resources in place to be able to do as automated a job of tracking as possible.

With IT tools such as ERP, the company has the possibility to keep efficient cash control and make more accurate forecasts, reducing deviations and risks.

2. Financial risk management

The enterprise has a number of risks that cannot be ignored, as the pandemic since 2020 has amply demonstrated. The ability to predict, respond to, and anticipate such risks can be crucial to a company’s treasury.

This includes interest rate volatility risks, risks arising from market liquidity, risks associated with commodity price volatility, etc.

3. Banking relationship, credit rating management, and financing

The relationship with the bank, access to policies, and the possibility of securing long-term credit confidence is something that needs to be carefully addressed by companies.

Long-term financing can be decisive for the future viability of the company. This requires a good relationship with the bank. This includes a clear strategy on the actions associated with the credit rating and also the importance of credit diversification.


We hope that this brief summary has served as an introductory guide to the keys to cash flow forecasting for a company, starting from the ground up.

“Give me a fulcrum and I will move the world,” said the Greek mathematician Archimedes. Certainly at the present time it can be crucial to strengthen a company’s finances in order to maximise results.

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