When your business is under cashflow pressure, a simple short-term forecast is worth more than any complex financial model. A 13-week (roughly three-month) cashflow forecast tells you exactly when money arrives and when it leaves — so you can see gaps coming before they become crises.
What to include
Start with a spreadsheet. Create one column per week for 13 weeks. For each week, list:
- Money in: expected customer payments (the date the cash should actually clear, not the invoice date), any loans or grants expected
- Money out: wages, rent, supplier payments, VAT, PAYE, loan repayments, insurance, subscriptions — everything with a known or estimated date
- Opening and closing balance: start with your current bank balance and run the arithmetic week by week
Be conservative on the inflows
The most common mistake is assuming customers will pay on time. Base your forecast on when you realistically expect money, not when it is contractually due. If a particular customer consistently pays 15 days late, build that in. An honest forecast that shows a gap is more useful than an optimistic one that masks it.
Use the forecast actively
A cashflow forecast is only useful if you update it each week with actuals and revise the projections. Where you see a future week going into the red, you have time to act — chase a debtor, defer a cost, or arrange bridging finance before the gap arrives. Lenders and advisers will also take you more seriously if you can show you understand your own numbers.
We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.
See also: Early warning signs your cashflow is under pressure, Options before a cashflow problem escalates.