If at this point you are unsure about what to do first, here is a suggestion:

Prepare a Cash Budget for Last Month

Why would you want to make a cash budget for last month, when it is history already? This is precisely the point. Go through all of the analytical procedures discussed earlier and reconstruct last month; then put it into the format of your forecast. This process will enable you to master the tasks listed below -- tasks that will help you as you begin to forecast in earnest.

• Refine the suggested forecast format for your business

• Learn the variables and characteristics of your business

• Identify sources of data, how to organize it, etc.

By using a "forecast period" that has already occurred, you have a known beginning and ending cash balance. This will allow you to prepare the required analysis and work with it until you achieve the correct answers.

Prepare a 90-Day Rolling Cash Budget

Having completed the above recommended "historical cash budget," you are now ready to do the "real thing." Pick a forecast period for any three month period of time and prepare the monthly forecast in the suggested format using your own historical forecast.

As your business completes the first forecast month, identify how accurate your forecast was and look at the areas that need to be further refined. Drop the completed month and add the next month in the future so that you still have the next three months on your forecast.

At the same time, if you identified areas in the first month that you believe were incorrect, make the appropriate corrections in the other two months so that your new rolling 90-day forecast reflects your latest and most accurate numbers.