Cash flow forecasting glossary

13-week cash flow forecast: A 13-week cash flow forecast is a week-by-week projection of cash in and cash out over the next quarter, used to manage a tight or uncertain cash position.
breakeven: Breakeven is the point at which a business stops making a loss and starts making a profit, because revenue has grown enough to cover all of its costs.
burn rate: Burn rate is the speed at which a business is using up its cash reserves, normally measured as the amount of cash lost per month.
cash flow forecast: A cash flow forecast is an estimate of the money moving into and out of a business over a future period, and of the bank balance left at the end of each period.
driver-based forecasting: Driver-based forecasting builds a financial forecast from the operational inputs that produce the numbers, such as prices, volumes, headcount and costs, and derives the financial statements from them.
gross margin: Gross margin is the share of revenue left after the direct costs of producing or delivering what you sold, before any overheads such as rent, salaries or marketing.
operating margin: Operating margin is the share of revenue left as profit after both the direct costs of sales and the running costs of the business, but before interest and tax.
runway: Runway is how long a business can keep operating before it runs out of cash, calculated by dividing the cash it has by the rate at which it is spending it, and usually expressed in months.
three-way forecast: A three-way forecast projects a business's profit and loss, balance sheet and cash flow statement together, linked so that the three always agree with each other.
working capital: Working capital is the money tied up in the day-to-day running of a business: what customers owe you plus the stock you hold, less what you owe suppliers.