A cash flow forecast shows when money is expected to enter and leave the business. To use it every week, start from a verified cash position, organise movements by likely payment date and update assumptions against what actually happened.
In this article
- Record your opening bank balance
- Map expected receipts and payments
- Identify weeks with cash shortfalls
- Update the forecast with actual results
It does not need to begin as a complicated model. A clear weekly view of receipts, payments and the resulting cash position can reveal a problem that an annual sales target or current bank balance misses. The discipline of updating it matters as much as the initial spreadsheet.
Start with available opening cash
Use reconciled bank balances at a stated date. Include relevant business accounts and payment-provider balances, noting restrictions or amounts not yet available for withdrawal. Do not count an expected customer payment as opening cash.
Show borrowing facilities separately with their limits and conditions. An undrawn facility is not identical to money already in the bank. Confirm what can actually be used and when, rather than assuming all potential funding is available.
Decide the forecast horizon and weekly boundaries. A short rolling forecast supports immediate decisions; a longer monthly view can show seasonality and major commitments beyond that horizon.
Build receipts from evidence
List outstanding customer invoices with expected collection dates. Use agreed terms, remittances, current correspondence and payment history. Mark disputed invoices or uncertain promises separately.
Add likely receipts from confirmed work and other supported sources. Keep prospective sales distinguishable from invoices already issued. A hopeful sales pipeline should not silently become certain cash next week.
For online sales, use settlement dates and allow for fees, refunds and reserves. For deposits and staged payments, identify the relevant agreement and milestone. Avoid counting both the full contract value and the deposit as separate inflows.
Include the payments that are easy to miss
Collect supplier bills, payroll requirements, rent, subscriptions, financing payments, tax commitments and planned equipment spending. Use payment schedules and actual due dates. Include cash movements to owners only where properly identified and agreed.
| Category | Useful source |
|---|---|
| Customer receipts | Debtor ledger and collection updates |
| Supplier payments | Approved bills and payment schedule |
| Payroll | Payroll plan and relevant employer commitments |
| Loans and finance | Current lender schedule |
| Tax | Accounts, returns and adviser-confirmed dates |
| Equipment or expansion | Approved purchase and project plans |
Distinguish an accounting expense from its cash payment. Depreciation is not a new bank outflow, while loan principal repayments require cash even though they are not ordinary operating expenses.
Test the first few weeks
Illustrative example: a business starts with £9,000 available. It expects £6,000 of receipts and £10,000 of payments in week one, leaving £5,000. In week two, it expects £3,000 of receipts and £7,000 of payments, leaving £1,000.
The figures are invented and simply illustrate timing. If £2,000 of week-two receipts slip to week three, the business instead faces a £1,000 shortfall in week two. A later recovery does not remove the immediate payment problem.
Show the lowest point clearly. A positive balance at the end of the forecast can conceal an earlier shortage. Use the forecast to decide what evidence or action is needed before that week arrives.
Run a realistic downside
Create a base case supported by current evidence and a downside reflecting specific risks. Delay a named uncertain receipt, include a known cost exposure or reflect a slower start for new work. Explain what changed.
Avoid creating an arbitrary pessimistic column with no operational meaning. The downside should lead to a practical response: collection action, discussion of payment terms, reconsidering discretionary spending or reviewing funding options.
Do not enter an assumed payment delay as if the supplier or HMRC has agreed it. Keep proposed actions separate until confirmed.
Update every week and learn from differences
Replace the completed week with actual receipts and payments, reconcile the new opening balance and extend the forecast. Explain material differences before moving them forward: a missed receipt might reflect a dispute rather than harmless timing.
Assign a named owner and hold a short review. Ask which assumptions changed, where the lowest balance falls and which actions are due. Keep dated versions so the business can see whether its forecasting is consistently optimistic.
Discuss EPOS cash flow support around the records, collection patterns and decisions involved. Review pricing information separately and agree whether the work covers initial preparation, regular updates or wider planning.