It is a quarter, long enough to catch quarterly payments and seasonal dips, short enough that the numbers are still reasonably known.

Is this the same as a budget?

No. A budget is a plan for the year; a cash forecast is a look at whether you can pay the bills in each of the next few weeks.

What if the forecast shows I will run short?

That is the point of it. Chase what is owed, delay what can wait, talk to the bank early, and look at prices on the work you are quoting now.

← Answers

How do I plan my business cash flow ahead?

List, week by week for the next thirteen weeks, the cash you expect in and the cash that has to go out, then see which week runs short. It is not an accounting report; it is a look ahead. Thirteen weeks is long enough to see a squeeze coming and short enough to be reasonably accurate.

Start with what is in the bank

Today’s balance is the starting point, not last month’s profit. Profit and cash differ because customers pay late, bills come due and tax is owed on a different schedule.

Money in, by the week it actually lands

Not when you invoice, when it is likely to be paid, based on how each customer actually pays. Be honest about the slow ones. Optimistic receipts are how a cash forecast fails.

Money out, including the big irregular ones

Payroll, rent, loan payments, suppliers, and the ones that sneak up: quarterly tax, insurance renewals, equipment, the government remittances you are holding. The irregular ones are the reason forecasts exist.

Find the low point, then act early

The useful output is the week where cash is lowest. Seeing it ten weeks out leaves room to chase an invoice, move a purchase or arrange a line of credit calmly. Seeing it the week before leaves very little.

Update it every week

Roll it forward: drop the week that passed, add a new one at the end, correct what changed. Fifteen minutes a week keeps it honest.

Also asked

Why thirteen weeks?: It is a quarter, long enough to catch quarterly payments and seasonal dips, short enough that the numbers are still reasonably known.
Is this the same as a budget?: No. A budget is a plan for the year; a cash forecast is a look at whether you can pay the bills in each of the next few weeks.
What if the forecast shows I will run short?: That is the point of it. Chase what is owed, delay what can wait, talk to the bank early, and look at prices on the work you are quoting now.

Written for your trade

This is the kind of thing Solomon works through with owners using their own numbers. See how it works →