Smart cash flow forecasting habit #2: review your forecasts at least once a week
22 March 2023Creating your cash flow forecast is a good start – but only a start. That’s because things change all the time: you win new work, some projects slow down, others get completed earlier than planned.
All of it has an impact on when you will receive or make payments. If your assumptions have changed, your cash flow forecast should change too.
Let’s assume you just found out that one of your client projects will slow down. Even if you did not expect any payments from this client for at least a month, it makes sense to update your cash flow forecast already this week.
We do forecasting to understand what actions we should take. The earlier we discover the potential problems, the more time we have to avoid them. And the more time we have, the more likely it is that we will figure something out.
Read from this article what is cash flow forecasting.
Successful professional services companies typically review progress with their client projects every week. Such reviews do not need to be detailed and time consuming as long as the answer to the “are we still on track to achieve {next important milestone} until {target date}” question is a confident “yes”. Adjustments to the cash flow forecast (if needed) are part of those reviews.
You might say – weekly reviews of your cash flow forecast will take a lot of time. Luckily that’s not the case if you use TailwindApp.
Every time you log in your account, your cash balance will be updated automatically and all recent incoming or outgoing payments will be marked as completed and removed from your forecast. And if you have understood certain payments will arrive earlier or later than previously planned, just move them to the new date using “drag & drop”.
Try the demo to find out how Tailwind works.
Cash flow forecasting can and should be easy!
Discover also other habits for smart cash flow forecasting: