How to create a cash flow forecast in Excel. This video will show you a cash flow forecasting example, from the data and assumptions that you need to build it, to the structure of the cash flow statement, to the formulas in the Excel spreadsheet, to the business decisions that need to be made to optimize cash flow.

⏱️TIMESTAMPS⏱️
00:00 Introduction to cash flow forecasting
00:25 Why forecast cash flow?
01:12 Cash flow forecast Excel spreadsheet
02:26 Structure of the cash flow statement
03:40 Forecasting cash receipts from customers
06:47 Forecasting cash paid to employees (and headcount)
09:15 Forecasting income taxes paid
10:32 Forecasting CapEx spending
11:20 Forecasting cash from financing activities
12:44 Analyzing the cash flow forecast
14:24 Cash flow planning

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Before we build our cash flow forecast in Excel, let’s ask ourselves why a business would want to make a #cashflow forecast. The main “technical” reason for cash flow forecasting is to identify cash shortages or surpluses. The main business reason to create a #cashflowforecast is a very fundamental one. Can we keep operating? Can we pay our employees and suppliers? Because if we can’t, the employees may not come to work anymore, and the suppliers might stop supplying us. If we can keep operating, can we grow and invest through Capital Expenditures or acquisitions? In case we have cash surpluses, can we pay down our loans, and can we pay dividends to shareholders? The cash flow forecast might be the most important spreadsheet you will ever build for your company!

Here’s a cash flow forecast spreadsheet that I have built based on real life experiences of the cash flow dynamics of several companies. As you can see from the header, this is a cash flow forecast on a monthly basis. Some companies might prefer a higher frequency: weekly, or if you are really running low on cash even daily. In some situations, a company may look at a cash flow forecast on a less frequent basis: quarterly or annually, that’s mostly to zoom out and look at the bigger picture.

This cash flow forecast spreadsheet is made up of just over 20 rows, and 14 columns (12 months, plus row labels on the left, plus full year check totals on the right).

The cash flow statement is split into three sections: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

Philip de Vroe (The Finance Storyteller) aims to make accounting, finance and investing enjoyable and easier to understand. Learn the business and accounting vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better investing decisions. Philip delivers #financetraining in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!

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