No matter the size of your company, your ability to manage cash flow often determines your ability to grow.
Cash flow tells you whether you’ll have enough money to cover your expenses, make payroll, invest in new opportunities, or even keep the lights on. You could be making sales left and right, but if the timing of money coming in and going out isn’t well managed, your business could still end up in the red.
That’s why cash flow forecasting is one of the most powerful tools at your disposal. By projecting your future cash position, you can identify potential shortfalls in advance, take action before problems arise, and make more confident financial decisions.
What Is a Cash Flow Forecast in QuickBooks?
A Cash Flow Forecast Report helps you visualize how cash moves in and out of your business over a given period. It considers your outstanding receivables, payables, bank balances, and even planned future transactions, giving you a dynamic view of your projected liquidity.
This report doesn’t replace your profit and loss statement or your balance sheet, but complements them by showing how timing impacts your ability to meet obligations. And when used consistently, it becomes your financial crystal ball.
Related Reading: 5 QuickBooks Features to Maximize Your Profits
How to Access and Use the Cash Flow Report in QuickBooks
For QuickBooks Online:
QuickBooks Online now features a more intuitive and real-time Cash Flow Dashboard—especially if you’re on QuickBooks Online Advanced.
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Go to Reports from the left menu.
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In the search bar, type “Cash Flow” and select Cash Flow Forecast.
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Choose the date range or forecast window.
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Customize the report by toggling future transactions (like recurring expenses or expected payments).
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Analyze your inflows (receivables, sales, funding) and outflows (bills, payroll, loan repayments).
For QuickBooks Desktop/Enterprise:
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Navigate to Reports.
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Select Company & Financial > Cash Flow Forecast.
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Choose the date range and reporting basis (accrual or cash).
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Adjust manually to include any known income or expenses that haven’t been recorded yet.
Desktop versions tend to rely more on manual updates unless integrated with additional forecasting tools.
Bonus Tip: Compare with Historical Data!
Don’t just rely on forecasts, compare them with historical data:
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Go to Reports > Business Overview > Statement of Cash Flows.
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This shows actual inflows and outflows from past periods.
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Use this to validate the accuracy of your forecasts and identify seasonal trends or red flags.
Why Is Cash Flow Forecasting So Important?
Cash flow is the lifeblood of your business. Without it, even a profitable company can collapse. Here’s why forecasting matters:
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Spot trouble early: A forecast shows upcoming shortfalls so you can adjust spending or secure financing before it’s too late.
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Strategic planning: Considering a big purchase or hiring? A forecast tells you if the timing is right.
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Investor and lender confidence: Lenders love to see proactive financial management. A well-prepared forecast can improve your chances of getting funding.
Types of Cash Flow (and Why They Matter)
Understanding your business’s cash flow isn’t just about watching bank balances. There are different types of cash flow metrics, and each provides unique insight into your financial health.
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Operating Cash Flow: This is the cash generated from day-to-day operations—like sales and services. It helps you see whether your business can sustain itself without outside funding.
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Free Cash Flow: What’s left after paying operating expenses and capital expenditures. Think of this as the “spendable” cash that you can reinvest or save.
In QuickBooks, you can track both by reviewing your Statement of Cash Flows under “Reports > Business Overview.”
Why Cash Flow Isn’t the Same as Revenue or Profit
It’s common to confuse cash flow, revenue, and profit, but doing so can lead to serious missteps.
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Revenue is your total income from sales.
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Profit is what’s left after subtracting all expenses.
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Cash flow reflects the actual money moving in and out of your bank account.
You can be profitable on paper but still run into cash shortages if payments are delayed or expenses pile up unexpectedly. That’s why cash flow forecasting in QuickBooks is crucial—it gives you visibility into what’s coming next, not just what’s happened.
Accrual vs. Cash Basis Accounting
QuickBooks lets you switch between accrual and cash basis views. Here’s the difference:
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Cash Basis: Records transactions when money changes hands.
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Accrual Basis: Records income when earned and expenses when incurred—regardless of payment.
If you’re forecasting, it’s smart to review both perspectives in QuickBooks so you’re not blindsided by upcoming expenses or delayed income.
Why Your QuickBooks Cash Flow Report Might Be Inaccurate
While QuickBooks does a great job of automating your financial insights, the accuracy of your cash flow report is only as good as the data you feed into it.
Here are some common pitfalls that can throw off your forecast and what to do about them:
1. Unreconciled Bank Accounts
If your bank accounts aren’t reconciled regularly, your cash balance could be off. This means QuickBooks is reporting more or less money than you actually have, skewing your short-term projections.
Solution: Make it a habit to reconcile all bank and credit card accounts at least monthly, ideally weekly if cash flow is tight.
2. Missing or Delayed Invoices
If you haven’t entered all outstanding invoices or you’ve delayed sending them, QuickBooks can’t forecast that income. This is especially critical in businesses with long payment cycles.
Solution: Use recurring invoices and set reminders in QuickBooks to stay on top of billing.
3. Unpaid Bills Not Entered
If bills are being paid outside of QuickBooks or haven’t been entered yet, your outflow will appear lower than it really is—giving a false sense of financial health.
Solution: Log every bill as soon as it’s received, even if it won’t be paid right away. This ensures it’s factored into your cash flow projection.
4. Old or Incorrect Customer/Job Balances
Outstanding balances that will never be collected—or were already written off—can inflate your forecasted inflows.
Solution: Regularly review and clean up your Accounts Receivable aging report. If something isn’t likely to be collected, write it off.
5. Recurring Transactions Not Set Up Properly
QuickBooks can project future cash flow based on recurring transactions like subscriptions or rent, but only if those are set up correctly.
Solution: Use QuickBooks’ recurring transaction templates to automate consistent expenses and income streams.
6. Incorrect Accounting Method
If your QuickBooks is set to accrual accounting but you’re relying on cash flow forecasting, the data may reflect earned income—not actual money received.
Solution: Double-check your report settings. For cash flow planning, use cash basis unless you’ve structured your business otherwise.
7. Disconnected Integrations or Bank Feeds
If your connected accounts or apps (like payment processors or bank feeds) go offline or stop syncing, data gaps can form quickly.
Solution: Regularly verify that your integrations are syncing properly and reconnect them if needed.
Related Reading: The Most Common QuickBooks Setup Mistakes We See
Don’t Let Cash Flow Catch You Off Guard
Understanding the different types of cash flow, how they interact with your accounting method, and how to use QuickBooks to anticipate future trends gives you a major advantage.
QuickBooks offers powerful tools to help you manage your cash flow, but like any tool, it’s most effective when used correctly and consistently. If you’re unsure how to get started or want help tailoring QuickBooks to your specific business needs, MISSION Accounting is here to help.
Our experienced team provides personalized support, training, and hands-on implementation for businesses like yours. Let us help you transform your financial data into clear, actionable insights.
Contact MISSION Accounting today for a free consultation and take the guesswork out of your cash flow.
