How to Use a Sales Pipeline to Accurately Forecast Your Cash Flow 

As a business owner, keeping a tight grip on your cash flow is non-negotiable. After all, cash is the fuel that keeps your operations running smoothly day-to-day. Without a healthy cash flow, even the most promising businesses can quickly go off the rails. 

But staying on top of cash flow projections is easier said than done, especially if you’re not sure what sales are coming down the pipeline. Forecasting cash flow often feels like a guessing game of predicting what deals will actually close and when that revenue will hit your bank account.

That’s where implementing a sales pipeline report can be a game-changer for accurate cash flow forecasting. By methodically tracking your outstanding proposals and the probability of winning each deal, you get a clear line-of-sight into your potential future cash position. It’s like having a crystal ball to see precisely what cash is coming down the line. 

We know what you’re thinking – another report to fill out on top of your already full plate? But stick with us here. This simple pipeline report packs a powerful punch when it comes to managing your cash flow effectively. 

Imagine knowing exactly which proposals are most likely to convert to cash in your bank account, and when. With that visibility, you can confidently project your cash position weeks or even months out. No more scrambling or tough cash crunches when an expected payment unexpectedly falls through. 

Plus, the pipeline report eliminates the guesswork and highlights exactly where you should focus your sales efforts for maximum impact. If certain opportunities have a low probability of closing based on the data, your team can re-prioritize their time on the hottest, most qualified leads. It’s all about working smarter, not harder. 

The best part? Implementing a sales pipeline reporting process is straightforward. Here are the key bits of info to track for each outstanding proposal: 

• Date proposal was received 

• Customer name 

• Type of revenue stream (e.g. new project, recurring services) 

• Revenue amount 

• Proposal due date 

• Probability of winning (your best estimate based on insight from the sales team) 

• Potential revenue calculated based on the probability 

By reviewing this report weekly in your team meetings, everyone stays aligned on adjusting priorities and strategically pivoting resources to the most promising opportunities. No more crossed wires, wasted effort, or critical deals slipping through the cracks. Your team knows exactly what to focus on to drive results. 

Just think about how much more strategic you can be with a real-time forecast of your cash situation at any given time. You can make staffing decisions, consider new investments, pivot your marketing spend, or double down on high-potential areas – all with confidence knowing the cash is there to support those moves. The visibility allows you to be proactive instead of reactive. 

For one client in the construction services industry, the probability of award metric was a game-changer. They were able to clearly see which proposals had a low likelihood of winning and make the tough decision to cut their losses by not wasting precious time on those long shots. Instead, they concentrated all their energy on the highest probability opportunities. The result? Their overall close rates increased dramatically just by pivoting their focus to the right areas. 

A restaurateur credits implementing a simple sales pipeline for helping them survive the industry-wide shutdowns a few years ago. By tracking outstanding catering and events deals in their pipeline, they could forecast their cash position and make the necessary staffing and sacrifices to make it through the lean times. Once they resumed normal operations, that same disciplined pipeline allowed them to ramp back up quickly and confidently based on the forecasted incoming cash. 

If you need any help getting a pipeline reporting process built out for your specific business, the Acumaxum team is here to make it a breeze. We’ll work closely with you to identify the right pipeline stages and data points to track based on your business model and sales cycle. From there, we can get your customized reporting up and running in no time. With your cash flow vista crystal clear, you’ve got this! Reach out today to learn more about how we can help give you a true cash forecasting edge.