5.3.1—Cash flow forecasts

A cash-flow forecast estimates cash inflows, outflows and the opening and closing balance over future periods. It tests liquidity, not accounting profit.

Forecasts can reveal a timing gap early enough to delay spending, negotiate credit, raise finance or change operations. Assumptions should be visible and updated when evidence changes.

A profitable firm that pays suppliers in March but collects customer invoices in April may need short-term finance despite positive expected profit.

A forecast is not a promise; its value depends on realistic sales, cost and timing assumptions.