Cash Flow Forecast with Template

What is a Cash Flow Forecast?

A cash flow forecast will assist any company in finding out the future balance in their bank account at any given time. Cashflow forecasting may be required if you look to banks or investors for investment, loans or overdrafts. It is also used as part of a business plan.

It may also be necessary for Management regularly to assist them in business decisions. Even if you are a sole trader, you may find the forecast a helpful tool.

At the end is a free template download, example and instructions for use.

Cash Flow Diagram

Below is a cash flow diagram showing some of the transactions to include in the report.

Cash Flow Diagram

Cash Flow Projection

Cash flow forecasts are generally prepared for a year. If your business is struggling financially, it may be worth completing a weekly or monthly.

A monthly projection may show a positive balance at the month-end, but a weekly projection may show a negative balance for one or two weeks during the month. Suppose you are aware of financial problems it is easier to try and avoid. In that case, you could take several measures, including putting more money into the account, extending an overdraft, or delaying payment or purchase.

If you are looking to expand your business in the future, you may be able to decide when the money will be available to do this. 

Difference between Cash Flow Forecast and Profit and Loss

Cash Flow Forecast example

It is different from a Profit and Loss or a Balance sheet, as it shows the cash paid into or taken out of the business in a given month. Some of the differences are:

  • Includes payments on both P&L and Balance Sheet, e.g. Fixed Assets and Stock, which are not included on the Profit and Loss.
  • You may give or receive credit; the payment or receipt may, therefore, be in a different month from the P& L. An example is you raise a sales invoice in March, but payment is not received until June.
  • There may be regular Direct Debits for fixed amounts, but the actual costs on the bills entered in the P&L may be different.
  • Dividend Payments may be made after the dividend date.

How to prepare for a Cash Flow Forecast

To prepare a forecast; you will need to know several pieces of information these include:

  • Opening Bank Balance
  • Customer Receipts
  • Purchase of stock or Fixed Assets
  • Business Overheads
  • When money is due to the business
  • Dividend payments
  • Taxation Payments
  • Finance to be either paid in or repaid

You can then set up a simple excel spreadsheet posting the cash receipts and payments when you expect them to happen. Some of the figures will need to be estimated.

The easiest way to obtain most of the figures is to look at the bank statements, profit and Loss and Balance sheet. Using a good accounting package will help in obtaining the figures, especially for money owed from customers.

It is worth taking a look at the following packages:


Cash Flow Forecast with TemplateCash Flow Forecast with Template

Sample Projection for 12 months.

The sample  above shows that the company started with £10,000 of investment. At the year-end, £5030 will be in the bank. Therefore if the company hits all its targets within the first year a small amount will be available in the bank.

It is worth spending time each month looking at the forecast and comparing it to the actual cash. Differences can be spotted, and you can then adjust any future figures that may be necessary.

Cash Flow Forecast Template

Instructions for use

Free cash flow forecast template

Open the template and update the 1 year to the year you are completing.

In the first column, type the first month, you can either continue to type each month in the row or click on the first month and drag the bottom right-hand corner of the cell to month 12. It will automatically change each heading.

The income 1, 2, 3.. can be changed to suit your business, for example, sales of hardware, Consultancy, Computer repairs…

The Exp 1, 2, 3.. can also be changed to your expenses, for example, wages, utilities, cost of sales and general overheads.

You are then ready to start adding figures. Enter the figures for the month you expect to receive the cash. An example is the business issues a sales invoice in January, but the customer is a slow payer, and expected in the bank in March. The figure would, therefore, entered in March.

Download Free Forecasting Template

By downloading the template, you agree to our licence agreement.

Further information is available at start-up loans.

Return from Cash Flow Forecast to Accounting Basics Page.