A cash flow forecast predicts what could happen to a business' economic state in the future months by calculating fixed costs and expected income and expenditures
Negative cash flow may only be temporary and not necessarily cause problems for a business, however it could require the business to to obtain additional finance (e.g. an overdraft) to overcome shortage of cash, or some payments could be delayed until the finance is available but this could mean some equipment cannot be bought until the situation improves
Negative cash flow does not mean a business is necessarily making a loss, just that its expenditure were greater than its incomes for that month

Why forecast cash flow?

to identify when the business is likely to be short on cash so that plans can be put into place to overcome the problem beforehand
to help the business plan for the future
to provide achievable targets for employees regarding sales

Limitations of cash flow - cash flow is on;y accurate for the first few months, anything longer is unreliable for reassign such as:

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GCSE Business Studies Diapositivas sobre Business Yellow Booklet (Production & Finance), creado por sophie.tams el 02/03/2016.

Business Yellow Booklet (Production & Finance)