Cash flow forecasting is the process of estimating the expected receipts and payments of financial amounts in a company for a specific time period.
It is important when planning and managing an organization without difficulties. Cash Flow Forecasting will become easier with the Finoko tool. Let’s consider the main goals of forecasting cash flows.
Liquidity management
Forecasting will make it easy to determine whether there will be enough funds to cover current obligations, such as salaries, rent and supplies. This is especially important for businesses where cash gaps can lead to financial difficulties.
Investment planning
Knowing the expected cash flows, companies can plan investments in expansion, modernization or new projects, avoiding unnecessary risks.
Assessment of the need for financing
Forecasting allows you to identify the moments when external financing may be required. For example, these are loans or investments that are often needed suddenly.
Scenario analysis
Companies can model different scenarios (optimistic, pessimistic) to assess the impact of various factors on cash flows. Specialists will be able to take into account changes in demand, price fluctuations or economic conditions in order to make better decisions.
The forecasting process involves collecting historical data on cash flows, analyzing current trends and factors affecting the business. In practice, various methods can be used, for example, linear extrapolation or the seasonality method. Forecasts can be short-term (for several months) or long-term (for a year or more).
With the financial instrument Finoko, you will be able to easily cope with the task. This is your opportunity to get accurate forecasts without a variety of errors in the shortest possible time!
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