
How long should you plan your cash flow for?
14 July 2025Next week? Next month? Next quarter? Next year? How far ahead should you plan your company’s cash flow?
Why do we plan the cash flows of our companies? We do it to make sure we will have enough cash in the bank when we need it.
Ideally, when we do our planning, we validate that this is very likely to be the case. But if a cash shortage is likely, we want to learn about it as much in advance as possible – so that we have enough time to avoid it.
By far the most sustainable option for avoiding potential cash shortages that the forecast suggests you may have is to win more business from your clients, deliver services and get paid.
How much time does your company need to win and onboard a new client, to deliver services and get paid? The longer it takes, the longer you should plan for. Your “planning horizon” should exceed your “contract to cash cycle” by at least one month.
Flexibility of forecasting periods is one of many reasons why many companies choose Tailwind for their forecasting. You can choose a period from a few days to up to five years and use different pre-built filters to view both short term and long term forecasts. And your forecast will update itself every time you log in and will always start on today’s date!