5. Why is it important to forecast cash-flow?
A cash flow forecast allows a business to plan for the future. It can therefore assist the business in making important decisions, such as employing more staff, opening a new branch, investing in a new business and rewarding the owners for their success.
A business will use a forecast to spot, in advance, when it is likely to have cash-flow difficulties. Therefore, the business can take action to ensure that it does not run out of cash.