When revenue stops growing, forecast cash by tracking when money is expected to arrive and leave—not by assuming sales will recover. Start with the cash actually available, model a flat-revenue base case, and carry each period’s closing balance into the next. The result shows when cash may fall below the amount needed to meet bills, giving you time to examine the cause and act.
What a cash-flow forecast tells you
A cash-flow forecast estimates money coming into and going out of a business over future periods, including the opening and closing cash balances. New Zealand’s Ministry of Business, Innovation and Employment describes it as an estimate of cash in and out for a given future period in its cash-flow forecasting guidance, last reviewed 15 July 2025.
It is not the same as a sales forecast or profit-and-loss statement. A sale can be recorded before the customer pays, and a profitable business can still lack cash on the day payroll, tax, or a supplier bill falls due. Forecast receipts and payments according to their expected cash dates so the model can reveal timing pressure.
Build the forecast around the decision you need to make
Choose weekly or monthly periods
Use weekly periods when you need to see near-term liquidity, uncertain collections, or the timing of payroll, rent, supplier bills, and debt payments. A monthly view may be easier to maintain for an operating plan or longer-range decisions. Some businesses use both: a detailed near-term view alongside a less granular longer-term plan. The appropriate horizon depends on how quickly cash obligations and receipts change; guidance from Business.govt.nz and the British Business Bank discusses daily, weekly, or monthly forecasting for different needs.
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Funding applications can call for a different level of detail. The U.S. Small Business Administration’s business-planning guidance advises a prospective five-year outlook with more detailed quarterly or monthly projections for the first year. Treat that as guidance for a financing plan, not a universal requirement for everyday cash management.
Choose a format you can update
A spreadsheet makes assumptions and formulas visible; accounting software may suit a team that already uses it to review transactions. The practical test is whether you can change assumptions, reconcile actual bank activity, and see how a change affects future cash. Official guidance recognizes both formats, but does not establish a universally best tool or endorse a particular product.
Free starting points include the Business Victoria cash-flow forecasting template and the statement setup guidance from Business.gov.au. Replace any sample assumptions with your own cash balances, payment dates, bills, and expected collections.
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Set a realistic revenue assumption when growth has stopped
Begin with actual sales history and separate the underlying trend from one-off events. If sales have flattened and there is no solid evidence of a change, use flat revenue as the central case. That is a transparent planning assumption, not a prediction that sales will remain flat indefinitely.
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Then model a lower case and a higher case. A downside case might reflect a customer loss, a further sales decline, or slower collections. Give the upside case a specific driver, such as signed contracts, renewal evidence, seasonality, or a planned price change. Keep speculative opportunities out of committed receipts. Business.govt.nz advises using past financial data for established businesses, weighing likely obstacles and benefits, and avoiding overly optimistic estimates; Business Victoria’s guidance recommends reviewing prior-year sales and whether they rose, fell, or stayed level.
Document why an assumption changes. Do not build a recovery into the forecast merely because the business needs one. If a price or marketing change is expected to affect sales, model it only to the extent supported by a reasoned estimate, and keep it distinct from the flat-sales base case.
Forecast receipts when cash is expected to arrive
List expected customer collections by the period in which the money should reach the bank, rather than the period in which a sale is made or an invoice is issued. The British Business Bank puts the distinction plainly: “Remember though, this is about when the cash is actually in your bank account.” Its four-step cash-flow guidance recommends accounting for expected client payment and bank-clearance timing.
Include collection of existing receivables as well as expected cash from new sales. You can list other likely cash sources separately, such as grants or tax rebates, where relevant. Asset sales or owner contributions may also provide cash, but do not treat those, borrowing, or other non-operating sources as recurring sales income. Examples of possible receipts vary by business; see Business.gov.au and Business Victoria.
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List outflows in the periods they will be paid
Start with recent bills and payment records, then add known changes. Include operating costs and other uses of cash, such as:
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- Supplier invoices, stock, and other purchases
- Wages and payroll-related payments
- Rent, utilities, insurance, and professional fees
- Taxes and loan payments, including principal and interest where applicable
- Marketing commitments and planned capital purchases
- Owner payments or distributions, where relevant
- Annual renewals, subscriptions, registrations, and one-off fees
Keep costs consistent with the sales assumption. If the flat-revenue case assumes fewer units sold, adjust related purchasing costs accordingly. Do not reduce fixed costs in the model unless a specific action or contractual change supports it. Put payments in their expected cash periods: for example, fortnightly payroll can fall three times in some months, and an annual renewal can create a large one-time outflow. The Australian government’s cash-flow statement guidance, Business Victoria, and the British Business Bank all identify a range of operating and irregular cash costs to include.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Calculate the balance and find the pressure point
For each period, use this calculation:
Closing cash = opening cash + cash received − cash paid.
Enter the actual cash available at the start of the first period. For every period after that, use the previous period’s closing cash as the new opening balance. This balance-forward structure is set out in guidance from Business.gov.au and Business Victoria.
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Mark periods when projected cash falls below the business’s required operating buffer or may not cover obligations due. Trace the gap to the receipt, payment, or assumption driving it. A positive profit figure does not tell you whether funds will be in the bank on a particular due date; the forecast is useful precisely because it makes timing visible.
If a shortfall appears, assess possible responses against its cause and timing. Depending on the situation, options to evaluate may include collecting overdue receivables sooner, reviewing stock levels and supplier timing, deferring discretionary spending, rescheduling purchases, or discussing financing options early. These are areas to investigate, not guaranteed fixes or individualized financing advice. Forecasting guidance from Business Victoria and Business.govt.nz also highlights working capital, debt recovery, tax, purchases, and borrowing as matters a forecast can help a business plan for.
Update the forecast against actual cash
At the end of each forecast period, compare projected receipts and payments with actual bank activity. Record the reason for material differences—such as a late customer payment, missed sale, unexpected bill, cost increase, hiring decision, or shifted payment date—and update the remaining periods accordingly. Business Victoria calls reviewing estimates against actual flows the most important step in its forecasting process.
Updating turns a static plan into a more useful decision tool. If a variance shows that customer payments regularly arrive later than expected, change the collection timing assumption rather than repeatedly relying on an unrealistic date. If spending differs, identify whether the cause is a recurring change or a one-off event before carrying it forward.
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| Choice | Useful when | Trade-off |
|---|---|---|
| Weekly or monthly periods | Weekly detail helps expose immediate payment and collection timing; monthly periods can be easier for longer-range operating plans. | More frequent periods need more detailed inputs and maintenance. Guidance supports both, without prescribing one horizon for every business. |
| Single case or scenarios | A flat-revenue base plus lower and higher cases makes uncertainty and the basis for possible change explicit. | A single case is simpler, but hides how sensitive cash is to sales and collection assumptions. |
| Spreadsheet or accounting software | Use a format that lets you change assumptions and reconcile actual activity. | Official guidance recognizes both; no specific program is tested or endorsed here. |
| Free template or paid learning resource | A free official template can provide a structure to adapt to your own records. | Templates need customization. A paid resource is not required to make a forecast. |
General forecasting practices are not a substitute for checking local tax rules, reporting obligations, debt terms, or insolvency concerns with an appropriately qualified adviser. Those requirements depend on jurisdiction and the business’s circumstances.
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