What is Cash Flow Forecast?
A cash flow forecast is a financial projection of the cash a business expects to receive and pay over a future period. It is the main tool used by finance teams to anticipate liquidity gaps and surpluses before they happen.
How It Works
- Choose a horizon — weekly for short-term liquidity, monthly for budgeting, annual for strategy.
- List all expected inflows by source: customer collections, financing, other income.
- List all expected outflows: suppliers, payroll, VAT, zakat, capital expenditure, debt service.
- Combine them with the opening cash balance to derive the projected closing balance.
- Compare actuals to forecast at each cycle and update assumptions.
Saudi Context
Saudi SMEs filing for ZATCA-approved tax instalments and Monsha’at-backed financing are often required to submit a 12-month rolling cash flow forecast. Companies on Tadawul also disclose forward-looking liquidity commentary in their annual board report.
Example
A retailer forecasts SAR 800,000 of customer collections, SAR 600,000 of supplier payments, and SAR 50,000 of VAT due in March. With an opening balance of SAR 100,000, the projected closing balance is SAR 250,000.