What is a cash flow forecast?

A cash flow forecast is a management tool that is used to predict the cash coming into and out of an organization on the period of time either weekly, monthly or quarterly. It assists in forecasting whether a business would generate sufficient cash to finance its expenses as well as develop future financial requirements. The ability to analyze incoming funds and payments going out helps the business to anticipate shortfalls, prevent cases of cash crunches and make adequate decisions. The cash flow forecasts are particularly essential to start-ups and smaller companies to have a good financial operation and sustainability in a long run.