Abstract: Cash flow forecasting is imperative in every business organization as cash is said to be the life blood of any business. The essence of forecasting is to ensure positive cash flow for smooth business operation. Small and Medium enterprises are vital contributors to the overall performance of an economy and play a crucial role in developing the economy and in creating employment, thus providing employment and income opportunities to a large number of people. One of the serious challenges faced by most business managers is how to effectively and efficiently manage cash in order to maximize their profits and ensure financial sustainability. The purpose of the proposed study was to study the effect of cash flow forecasting on financial sustainability of SMEs in Kericho Central Business District.