How often should a growing business update its cash flow forecast?

Most businesses create a cash flow forecast once a year - usually at budget time - and then forget about it. The problem? By month three, reality has diverged so far from the plan that the forecast is useless.

For growing businesses, we recommend updating your cash flow forecast monthly, as part of your management accounts cycle. Here's why:

Assumptions change constantly. A new client win, a delayed payment, a price increase from a supplier - each of these shifts your cash position. Monthly updates keep your forecast grounded in reality.

Cash is not profit. A profitable business can still run out of cash. Monthly forecasting helps you spot cash crunches 60-90 days before they hit, giving you time to act.

Better decisions, faster. When you can see 12 months ahead with confidence, you make better hiring decisions, investment decisions, and growth decisions.

The key is making it part of your rhythm, not a one-off exercise. At Cohelm, cash flow forecasting is built into our monthly five-step process - so it's always current, always accurate, and always actionable.