Cash flow is the lifeblood of any company. Therefore, forecasting cash flow is an essential part of running a successful business in the UK during these challenging times.

That’s the message from Surrey-based TWP accountants, who is encouraging businesses to get to grips with their cash flow.

Cash flow is the movement of money in and out of a business. In other words, it’s the amount of cash a company has available to pay its bills and meet its financial obligations.

Nicola Crick, Client Manager at TWP, said: “Cash flow is essential for businesses for several reasons. Firstly, it allows a company to pay its bills, employees, and suppliers on time.

“Secondly, it enables a business to invest in its growth and future, such as purchasing new equipment or hiring more staff.

“Finally, it provides a buffer against unforeseen events, such as economic downturns or unexpected expenses.

Forecasting cash flow involves estimating the amount of cash a business will have in the future based on its expected income and expenses.

It’s essential to forecast cash flow regularly, such as monthly or quarterly, to avoid any surprises and ensure that the business has sufficient cash to operate, Nicola explained.

“Given the pressures that many businesses are under from inflation and the cost-of-living crisis it is essential that they understand their cash flow and can forecast where they will be each month,” Nicola added.

“One of the primary reasons for business failure in the UK is negative cashflow, so this issue should be taken seriously and not be avoided.”