How can cashflow forecasting help a distressed company?

Cashflow forecasting is one of the most important tools for companies in financial distress. It involves projecting future income and expenses to identify funding gaps before they occur. By preparing accurate forecasts, directors can plan when cash shortages are likely and take steps to manage them, such as negotiating with creditors or seeking short-term finance. Forecasting also helps demonstrate to lenders, HMRC, and suppliers that the business is taking its obligations seriously and has a plan for repayment. In insolvency, cashflow forecasts are often used to support proposals such as CVAs or time-to-pay arrangements. Without accurate forecasting, companies risk running out of cash unexpectedly and losing creditor confidence. Regularly updated forecasts give directors the clarity needed to make informed decisions and avoid sudden collapse.