A PRACTICAL FORECAST
Forecast when cash moves
Cash flow follows payment dates rather than the date a sale or expense is recorded. Enter customer receipts in the month you realistically expect them to clear, then place payroll, tax and supplier payments in their expected payment periods.
Use bank timing, not invoice timing
A sale belongs in the forecast when payment is expected to clear. A purchase belongs when cash will leave the account. Place VAT, payroll, loan payments, card settlements and one-off purchases in their actual expected months. This prevents an accounting profit from being mistaken for available cash.
A worked three-month pattern
Suppose opening cash is £20,000. Month one receives £30,000 and pays £27,000, closing at £23,000. Month two receives £24,000 but pays £31,000 including VAT, closing at £16,000. Month three then starts from £16,000—not the original balance. The middle month is the pressure point even though the three-month period may finish positively.
Build a downside case
Save the base case, then delay a large receipt or add an unexpected payment. The lowest closing balance shows when the plan has the least room and where a collection, payment-timing or funding decision may be needed. Change one timing assumption at a time before combining several stresses.
Review the forecast regularly
At the end of each month, replace forecast amounts with actual cleared cash, move delayed items to their realistic period and add a new future month. Record one action for the lowest-balance period, with an owner and deadline. A forecast becomes more useful through disciplined updating, not extra precision in the first version.
Download and protect the record
The CSV contains the working inputs and outputs displayed on the page. Use a dated filename and keep base and downside cases separate. Review imported number formats in spreadsheet software, and do not include bank credentials, card information or other sensitive data in the worksheet.
Common mistakes
- Entering invoiced sales as if they were collected cash.
- Omitting tax, payroll, debt repayments or one-off commitments.
- Starting every month from the original opening balance.
- Looking only at the final balance instead of the lowest point.
Continue the decision
Use the Cash Flow Forecast Calculator for a single-period check, the DSO Calculator to examine collection speed and the Cash Runway Calculator for a downside buffer. Browse both downloads in the free template library.
This template is a planning aid, not accounting, tax or financial advice. Method reviewed 5 August 2026.