Cash flow forecast for small business: a 13-week method

A business can be profitable on paper and still struggle to pay bills. A cash-flow forecast asks when money will actually enter and leave the account. It is a planning tool, not a guarantee, and it works best when assumptions are visible enough to challenge.

Start with the cash you can use

Use the current available balance, noting money reserved for taxes, payroll or other obligations. Choose a weekly view if timing is tight and a monthly view for longer-range planning. Keep personal and business money separate in your records. Confirm treatment of taxes, financing and restricted funds with your accountant where needed.

Place income on expected receipt dates

An issued invoice is not cash in the bank. Estimate receipts using payment terms and each customer's recent behaviour. Keep contracted income separate from speculative sales. Show expected deposits and final balances independently. If a date is uncertain, label the assumption rather than spreading income evenly across a month because it looks tidy.

Opening cash balance.
Expected customer receipts by date.
Committed payments, including payroll and tax obligations.
Optional spending shown separately.
Closing cash = opening cash + receipts − payments.

Worked example: a late customer payment

In an illustrative week, opening cash is 4,000 currency units, expected receipts are 3,000 and committed payments are 5,500. Forecast closing cash is 1,500. If a 2,000 receipt slips to the following week, closing cash becomes negative 500. The problem is timing, even if the underlying work earns a profit.

Build a cautious scenario

Move uncertain receipts later and include foreseeable cost changes. Do not assume every sale fails; model specific plausible risks. Compare the resulting low point with the minimum buffer you need. Decide early whether to postpone optional spending, improve collections or seek professional advice about financing, rather than waiting until a payment is due.

Replace estimates with actuals

Update the forecast after each reporting period and record why important assumptions missed. A recurring late payer may need different expectations or agreed terms. Preserve the original forecast so you can learn from the difference. The useful output is the next decision about cash, not a polished spreadsheet that never changes.