Cash flow forecasting is the process of estimating the amount of money that will flow in and out of a business over a specific period. This helps businesses plan for future expenses and revenues, ensuring they have enough cash to meet their obligations. By analyzing past financial data and considering future events, companies can create a clearer picture of their financial health. Accurate cash flow forecasts are essential for effective financial management. They allow businesses to identify potential shortfalls, make informed decisions about investments, and manage their resources efficiently. Regularly updating these forecasts helps businesses adapt to changing circumstances and maintain stability.