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Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →A useful cash-flow forecast shows when money is expected to arrive and leave—not just whether the business expects to make a profit. Start with cash currently in the bank, estimate receipts and payments in the periods they are due, and carry each period’s closing balance into the next. Then compare a baseline with scenarios for higher borrowing payments, supplier costs, or both.
What a cash-flow forecast tells you
A forecast tracks the timing of cash. That timing can differ from accounting revenue and expenses: a sale may be recorded before the customer pays, while a supplier bill may be paid in a different period from when the cost is recorded. A business can therefore appear profitable and still face a cash shortage if collections arrive after bills are due.
As Business Victoria puts it, “Cash flow is all about timing, so when preparing your forecast, try to be as accurate as possible on the timing of your inflow and outflow estimates.” Business Victoria’s cash-flow forecasting guide emphasizes estimating when cash actually moves.
Choose a period and a useful horizon
Monthly periods are a practical starting point for an operating forecast. Use weekly periods instead—or alongside monthly totals—if a near-term payment date could cause a shortage that monthly totals would conceal. Choose a horizon long enough to include the decision you need to make, such as a loan-rate reset, a supplier-price change, a seasonal low point, or a funding decision. There is no single required horizon for every business.
Set up the spreadsheet
Use one row per period and keep receipts, payments, and assumptions visible. A basic structure is:
| Row | What to enter |
|---|---|
| Opening cash | Cash available at the start of the period; for the first period, use the current bank cash balance. |
| Cash receipts | Customer payments and other expected cash inflows, entered when they are expected to arrive. |
| Cash payments | Supplier bills, payroll, operating costs, taxes, asset purchases, owner payments where relevant, and debt service, entered when due. |
| Net cash movement | Cash receipts minus cash payments. |
| Closing cash | Opening cash plus cash receipts minus cash payments. |
For every later period, set opening cash equal to the prior period’s closing cash. In spreadsheet terms, if each period occupies one column, the next period’s opening-cash cell should link to the previous period’s closing-cash cell rather than being re-entered independently. The Australian Government’s cash-flow statement guidance and template use opening balance, inflows, outflows, and closing balance as the core structure.
Gather the records behind the estimates
Build the forecast from records and known payment arrangements, not from a single sales or expense total. Collect:
- Current bank cash balances and recent bank statements.
- Sales history, customer invoices, collection patterns, and any known seasonal changes.
- Supplier invoices, purchase orders, quotes, contract clauses, payment terms, and expected effective dates for price changes.
- Payroll dates, rent and recurring bills, tax or GST remittance dates, annual charges, and planned asset purchases.
- Loan agreements, outstanding balances, rate-reset terms, lender notices, and payment schedules.
Keep revenue assumptions separate from the date customers are expected to pay. Likewise, show a supplier cost and the date its cash payment is due. Business.gov.au advises labeling estimated amounts and stating whether figures include or exclude GST; choose the tax treatment that applies to your business and apply it consistently. Tax labels and obligations vary by jurisdiction.
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Forecast receipts and ordinary payments
Estimate cash receipts
Use sales history, customer payment behavior, seasonality, and known changes to estimate receipts in the periods they are likely to reach the bank. Show other genuine expected inflows separately—such as a grant, tax refund, loan proceeds, or owner contribution—rather than treating them as customer collections. Do not include uncertain funding as though it were confirmed.
List payments by category and due date
Separate fixed costs from variable costs. Fixed costs may recur at a similar amount, while variable costs move with sales volume or supplier prices. Include payroll, rent, operating expenses, taxes, supplier purchases, asset purchases, owner payments where relevant, and debt payments. Annual bills, seasonal purchases, and lumpy expenses belong in the period when cash is expected to leave, not spread evenly merely to make the spreadsheet look smooth.
The New Zealand Small Business Accounting guide recommends separating fixed and variable costs and estimating transaction timing using payment terms and seasonal variation. Its guidance is useful for the forecast mechanics, but local tax and legal treatment should follow the rules that apply where you operate.
Make input-cost changes visible
For each material input likely to change, record the current cost assumption, the alternative assumption, when the new price is expected to take effect, and when the resulting bill is expected to be paid. If the purchase amount varies with output, link the cost to the relevant units or volume assumption. This makes it possible to distinguish a price increase from a change in the quantity purchased.
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Base a changed-cost case on a supplier quote, contract clause, purchase order, or a clearly labeled planning estimate. Avoid applying a general percentage increase to every expense without a business reason. Replace estimates with confirmed prices and actual payment dates as they become known.
Model variable-rate borrowing from the loan terms
For a variable-rate loan, gather the outstanding balance, the index or base rate, contractual spread, any caps or floors, reset dates and frequency, payment due dates, and the lender’s revised payment information. Enter the full loan payment as a cash outflow in the period it is due; principal as well as interest may be part of that payment.
Use the actual agreement and lender notices rather than assuming all variable-rate loans recalculate on the same schedule or by the same formula. The U.S. Small Business Administration notes that payment amounts may change when the rate changes on a variable-rate 7(a) loan; that program-specific guidance is not a universal rule for other loans or jurisdictions. Check the SBA’s 7(a) loan information and confirm your own payment terms with your lender.
For a fixed-rate loan, keep the scheduled cash payment unchanged unless the agreement or lender gives a reason to change it. Do not substitute an interest-expense estimate for the full payment if principal is also due.
Compare a baseline with downside scenarios
Keep the assumptions for each case explicit. A simple set of scenarios is:
- Baseline: Current known loan payment and supplier-cost assumptions.
- Rate case: The payment schedule supplied or confirmed for the relevant rate reset.
- Input-cost case: The expected higher cost for the affected inputs, starting when the change takes effect and cash is paid.
- Combined downside: Both changes together. If a separate sales or collection-timing change is plausible, state that assumption rather than hiding it inside the combined case.
You can create a separate worksheet for each case or use scenario controls that change the same visible assumption cells. The Australian small-business resource on gathering cash-flow data describes using a spreadsheet to test whether proposed changes improve cash flow; the specific scenario labels above are a practical way to organize that comparison, not a prescribed official framework.
For each case, compare the lowest closing cash balance, the first period it falls below zero or your chosen operating buffer, and the size and duration of any gap. A buffer is a planning choice for your business, not a universal or legal reserve requirement. These comparisons help identify when action may be needed, such as discussing terms with a supplier or lender, changing payment timing, or arranging funding before a shortfall arrives.
Review actual results and refresh the forecast
At the end of each period, replace estimates for receipts and payments with actual cash activity. Record material differences and their causes—for example, a customer paid later than expected, a supplier invoice was higher, or a planned purchase moved to another month. Then update future periods using the best information available.
Choose a review cadence that fits how quickly cash moves in your business. A retailer or contractor with frequent transactions may need to review more often than a business with fewer, predictable payments. A forecast is a planning aid, not a guarantee; its usefulness depends on keeping the records and assumptions current.
Quick Recap
Questions to check before relying on the forecast
- What is my cash position? Does the opening balance match the cash actually available, and does each period roll forward correctly?
- How much do I need to pay in tax and super commitments? Are the applicable remittance amounts and dates represented for my jurisdiction?
- How much does my business have available to spend? What remains after bills due in the period and any operating buffer I have chosen?
- Has my business improved? Compared with actual prior periods and the baseline, are cash balances and timing moving in the right direction?
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