How far can you forecast cash flow?
Asked 3 years ago
How far can I realistically forecast my cash flow? I know the standard is 6-18 months but I'm trying to draw up a business plan for the next 5 years. I've had a few friends tell me they've tried something similar but the timeframe is too long and almost all of the forecasts ended up inaccurate. Just wondering if anyone has had a similar experience or had similar plans in the past?
Jolina Regin
Tuesday, February 14, 2023
There are three common types of forecasting periods short period, medium-term, and long-term. The short-period forecasts look two to four weeks into the future and also have a daily breakdown of cash receipts and payments. The medium period looks like two to six months into the future. They are used for debt reduction and liquidity risk management. The long-period forecasts look 6-12 months into the future. They are used for annual budgeting, analysing capital projects, and long-term growth strategies.
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