Cash flow planning for small businesses: a 13-week forecast you can keep up to date
Many profitable small businesses get into trouble because money arrives later than the bills. A simple cash flow forecast shows weeks in advance when the account will be tight, so you can act before it happens. It takes an hour to set up and fifteen minutes a week to maintain.
Profit is not cash
A profitable month can still empty the account: customers pay after 30 days, stock is paid in advance, and VAT and tax prepayments fall due in the same week. Cash flow planning looks only at money in and money out, week by week.
Build a 13-week forecast
Use a simple table with one column per week for the next 13 weeks. Start with today's bank balance and add the expected payments in and out:
- Incoming payments from open invoices, by expected payment date.
- Sales paid immediately, estimated from the same weeks last year.
- Fixed outgoings: rent, salaries, loans, insurance, subscriptions.
- Variable costs: purchases, ingredients, freelancers.
- Tax payments: VAT, prepayments and payroll taxes.
Plan seasons and one-off payments
Seasonal businesses such as restaurants, hotels and garden services earn most of their money in a few months. Mark the weak months and the large one-off payments, such as annual insurance, tax arrears or equipment, so they do not come as a surprise.
Speed up money coming in
Invoice as soon as the work is done, state a clear due date and offer easy payment methods. Ask for deposits on larger orders and events. Follow up overdue invoices on a fixed schedule; automation helps because reminders go out even when nobody has time.
On the outgoing side, agree payment terms with suppliers and avoid paying earlier than necessary.
Set a buffer and warning signals
Decide on a minimum balance, for example two to three months of fixed costs, and mark the weeks in the forecast that fall below it. When a warning week appears, act early: chase invoices, move purchases or talk to the bank before the shortage, not during it.
Frequently asked questions
- Which tool do I need?
- A spreadsheet is enough to start. Many accounting programs show open invoices and planned payments; the forecast itself still needs your judgement on dates.
- How often should I update the forecast?
- Weekly, ideally on the same day. Replace estimates with actual figures and extend the forecast by one week.
- What if the forecast shows a gap?
- Act early: collect receivables, ask for deposits, delay non-urgent purchases and talk to your bank or tax adviser about options before the gap arrives.
Want your cash flow forecast to update itself from bank and accounting data? Tell us which tools you use. We will connect them and set up alerts for tight weeks.
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