How to build a cash-flow forecast

You can make a sale today and still have no money to pay a supplier next week. A cash-flow forecast helps you see that timing gap early. It is different from a profit forecast: the question is when will money enter or leave the bank?

Choose a period you can update

Use weeks if your cash position changes quickly; months may be enough for longer-range planning. Start with your cleared operating bank balance. Keep tax savings or funds you cannot freely use separate.

For each period, list cash you expect to receive and payments you expect to make. Put a customer invoice in the period when payment is likely to clear, not when the invoice is sent. Include payroll, rent, suppliers, tax, loan repayments and equipment purchases when they are due.

Work through a simple example

Week	Opening cash	Receipts	Payments	Closing cash
1	$10,000	$18,000	$15,000	$13,000
2	$13,000	$9,000	$17,000	$5,000
3	$5,000	$13,000	$12,000	$6,000

Each week’s closing cash is its opening cash plus receipts less payments. It becomes the following week’s opening amount. In week two, the balance falls to $5,000 even though the three-week total remains positive. That low point deserves attention.

Use the cash-flow forecast builder to test a three-period scenario. The cash-flow forecast template gives you a structure for recording assumptions and actions.

Test a slower-payment scenario

Move your largest expected customer payment into a later period. Ask: which bill comes due before that cash arrives? If the forecast turns negative, start with practical actions: follow up invoices, check whether a supplier date can be agreed, delay discretionary spending, or review stock purchases. Speak with your accountant or bookkeeper if the gap is hard to resolve. Finance may be one option in some circumstances, but it has costs and should be considered after you understand the cause.

Keep the forecast honest

Mark each receipt as confirmed or estimated. Once a week, replace estimates with actuals, move unpaid invoices to their new expected dates and add bills you now know about. A forecast is useful because you revise it, not because the first version is perfect.

Important things to know

• A cash-flow forecast is an estimate. It does not guarantee money will arrive on time.
• Use one consistent GST basis. Include expected GST payments in the period they fall due and ask your bookkeeper or registered tax/BAS agent to check tax assumptions.
• A positive closing balance may still be inadequate if it leaves no room for an unexpected bill.
• If you may not be able to pay debts when due, seek qualified advice early. Do not rely on this worksheet as an insolvency assessment.