Most business owners we know suffer from at least a little stress over their finances — or maybe even a lot! It’s natural to feel a bit of anxiety when it comes to financial planning for your business, even when your business is performing exceptionally well.

This is especially true when you don’t know your numbers. And while building a budget for your business is a great place to start, there’s a lot more you can do to soothe your financial fears and plan for the future with confidence. 

How can this be done, you ask? The answer is to engage in cash flow forecasting. 

What Is Cash Flow Forecasting?

Cash flow forecasting means that you estimate the amount of money you anticipate will flow into and out of your business over a specific period of time in the future. 

But cash flow forecasting isn’t based on guesswork. Robust cash flow forecasts use historical data from your business's financial statements (including your balance sheet and income statement) to build out predictive scenarios for the future. This is why it’s necessary to know your current and past numbers. 

Your accounting software likely already has the financial statements you need. You can also compile this data manually by gathering bank statements, records of all sources of income, and expense records from the past six months to a year. The more data you can gather, the more accurate and informative your forecasts will be.

Advantages of Cash Flow Forecasting

Cash flow forecasting has multiple benefits and can help businesses solve a variety of financial problems. Business owners most commonly use cash flow forecasting to help them avoid cash shortages and make appropriate plans to use surplus profits and reinvest in the business. 

Cash flow forecasting can also help business owners create strategic plans to get out of debt or make predictions about business growth, helping the owner to grow sustainably. Basically, cash flow forecasts can provide business owners with the reasoning and confidence to make specific decisions in their business — no more blind guesswork.

How to Create a Cash Flow Forecast

We’re going to let you in on a little secret. While creating a cash flow forecast manually is possible, it’s not usually an effective use of time, nor is it the most accurate method. Using a cash flow forecasting software is the most efficient way to create a robust cash flow forecast that’s based on multiple sources of data.

As outsourced CFOs who engage in cash flow forecasting for our clients all the time, we’ve found that our favorite short-term cash flow forecasting software is Float. Float allows business owners to generate cash flow forecasts and then play around with any scenario they can think of. Once you have a cash flow statement, you can input a future scenario, such as:

• Making a hire

• Losing one of your biggest clients

• Increasing your overhead expenses

• Receiving a late payment from a client

• Paying off a large debt all at once

• And more!

The software will then reveal how other parts of your business would be affected if that scenario were to come to pass. There are a lot of great things you can do with Float that will help you save time, energy, and uncertainty when you want to make financial decisions in your business.

Best Features of Float for Creative Agency Owners

Let’s dive into some of the specific features which make Float a prime cash flow forecasting and scenario planning software option for creative agencies.

Accounting Software Integrations

Float integrates easily with three major accounting software programs: Xero, FreeAgent, and QuickBooks Online. If you use any of these three accounting softwares, Float will seamlessly integrate with your platform so that your forecasts are updated in real time. 

Once you’ve connected your accounting software to Float, Float will automatically pull your financial statements from your accounting system. You don’t have to manually update your forecasts every time you want to make a financial decision or review a new scenario plan.

Easy to Understand

Float doesn’t provide you with complicated spreadsheets or convoluted financial statements you’d need an accounting degree just to understand. Instead, Float generates easy-to-read graphs and charts for business owners who aren’t necessarily financial whizzes. 

Already have a cash flow forecast spreadsheet in the works? You don’t have to start over when you sign up for Float — instead, you can easily copy and paste it into Float with their Spreadsheet Input tool and pick up where you left off.

Built With Agencies in Mind

Float was created for multiple types of businesses — and works great for agency owners who know their project-based revenue might be unpredictable. You can rest assured that unpredictable revenue doesn’t mean Float won’t work for you. In fact, unpredictable revenue makes Float that much more indispensable to your business’s financial health.

Float Pricing Plans

If you’re not sure Float is right for you and your business, you can try it for free for 14 days. When you decide it’s everything you need and more, pricing is simple and affordable. Float has 3 major pricing plans for agencies of all different sizes.

The Essential pricing plan gives you basic forecasting and scenario planning tools for up to 5 scenarios with 3 different users. You’ll receive a Weekly Cash Summary, Budget Reports vs. Actual Reports, email support, and a call with a Float Expert. This will cost you $59 per month on an annual plan, or $69 per month on a monthly plan.

The Premium pricing plan includes more users and more scenarios, plus a quarterly review of your forecast with a Float expert. If you pay annually, this plan will run $99 per month if you pay annually or $119 per month on a monthly plan.

If you want to add up to 100 users and 100 additional scenarios, you can sign up for the Enterprise plan. This plan also comes with a dedicated account manager and monthly forecast reviews with a Float expert. This plan costs $199 per month on an annual plan or $249 per month on a monthly plan.

Most of our clients get by just fine with the Essential plan or the Premium plan depending on the size of their agency.

Use Your Cash Flow Forecasts With Confidence

At Lamplight Advisors, we strive to help you manage your business finances easily and effectively so you’re able to plan for the future with confidence. We know how difficult it can be properly allocate time and energy to making important financial decisions, and we seek to assist agency owners in making informed decisions that will help them grow sustainably. 

We are a CFO services company that aims to assist creative firms in managing the financial complexities of their business. If you’d like help simplifying the way you work, the Lamplight team is here for you: Click here to schedule a conversation today.