Start with the bank
Begin with the real opening cash balance and list expected receipts and payments by week or month. Use payment dates rather than invoice dates.
A forecast built only from the profit and loss account can miss the timing of VAT, tax, loan repayments and old customer debts.
Use realistic assumptions
Separate committed sales from opportunities. Reflect actual customer payment behaviour and supplier terms. Add payroll, rent, VAT, Corporation Tax, loan payments and planned asset purchases.
Create a base case and a downside case rather than pretending one number is certain.
Update it regularly
Replace forecast figures with actuals and move delayed receipts to the new expected date. Review the difference between forecast and actual to improve the next version.
The forecast should be short enough to update and detailed enough to support decisions.
A practical next step
Identify the lowest forecast cash point, the assumptions behind it and the action needed if receipts are late.
Accountants4All can build or review cashflow forecasts and connect them to management accounts and funding discussions.
Official guidance
Rules and deadlines can change. Check the current official guidance and obtain advice for your circumstances.
GOV.UK: Finance and support for your businessNeed a clear next step?
Talk through the records, deadline or setup involved.
This article provides general information and is not personal tax, legal or financial advice.