Four ways to refine your cash flow forecasting

This content is provided by Cordia Partners.

Run a business or nonprofit for any length of time and the importance of cash flow becomes abundantly clear. When payroll is due, bills are piling up and funds aren’t available, blood pressure tends to rise. For this reason, being able to accurately forecast cash flow is critical. Here are four ways to refine your cash flow approach:

  1. Know when you peak. Many organizations are cyclical, and their cash flow needs vary by month or season. Trouble can arise when an annual budget doesn’t reflect expected income from products or services being sold. For seasonal operations using a one-size-fits-all approach can throw budgets off, sometimes dramatically. To forecast your organization’s cash flow needs and plan accordingly, track your peak sales/revenue over as long a period as possible.
  2. Engage in careful accounting. Effective cash flow management requires anticipating and capturing every expense and incoming payment, as well as — to the extent possible — the exact timing of each payable and receivable. But pinpointing exact costs and expenditures for every day of the week can be challenging. Organizations can face an array of additional costs, overruns, and payment delays. Although inventorying every possible expense can be tedious and time-consuming, doing so can help avoid problems down the road.
  3. Keep an eye on additional funding sources. As your organization expands make sure to secure a dedicated line of credit with a bank to meet cash flow needs. Interest rates on these credit lines, however, can be high compared to other types of loans. So, lines of credit typically are used to cover only short-term operational costs, such as payroll and supplies. Federally funded loans have been widely offered during the COVID-19 pandemic and may still be available to you. Look into these and other options suitable to the size and needs of your organization.
  4. Invoice diligently, run leaner. For many organizations, the biggest cash flow obstacle is slow collections. Be sure you’re invoicing in a timely manner and offering easy, convenient ways for customers to pay (such as online). For new customers, perform a thorough credit check to avoid delayed payments and bad debts. Another common obstacle is poor resource management. Misguided investments and oversized offices are just a few examples of poorly managed expenses and overhead that can negatively affect cash flow.

As you refine your approach to accurately forecast cash flow, you should also be preparing your annual budget forecast at the end of each year. If you need help, contact Cordia anytime. Our senior accountant and FP&A experts are readily available to position you for success. Visit to learn more about our financial planning, outsourced accounting, and technology consulting services.

Related Categories:

Sponsored Content

More from WTOP

Log in to your WTOP account for notifications and alerts customized for you.

Sign up