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Forecasting in Practice
Accurate cash flow forecasting blends historical trends, active pipeline data, and well-documented assumptions about collections and spend. Rather than a one-off spreadsheet, a practical forecast is a living model used for weekly decision-making and scenario planning.
Begin with the bank balance and recurring payments, then layer in expected receivables and known one-time expenditures. Maintain multiplemultiplemultiple scenarios—base, upside, downside—and tie assumptions to clear levers (e.g., collection rate, new bookings pace) so stakeholders can see the drivers behind movement.
Example: A subscription business can model the effect of a 5% change in churn across three months to see how much additional runway is required under each scenario. This helps leadership decide whether to accelerate sales or adjust spend.
Action checklist:
- Reconcile bank and ledger data weekly
- Automate pulls from billing and banking systems where possible
- Create scenario toggles and document assumptions for each
- Review forecasts with business owners every cadence
Forecasting becomes a decision support tool—clear assumptions and repeatable processes are what make it reliable.
