- Forecast the date money reaches or leaves the bank.
- Use a cautious case alongside your expected figures.
- Update the forecast weekly and investigate differences.
Why use thirteen weeks?
A thirteen-week view is long enough to cover several payroll cycles and common payment patterns, while remaining detailed enough for day-to-day decisions. It is a planning tool rather than an accounting requirement.
Start with the actual available opening cash. Show an overdraft separately instead of treating its limit as cash you own. If funds are ring-fenced for VAT or another purpose, make that restriction visible.
Build one column for each week
List likely customer receipts by realistic collection date. Add other incoming funds only when you understand the conditions and timing. A funding application is not the same as approved, drawable finance.
Then enter supplier payments, wages, taxes, rent, subscriptions, loan repayments and owner withdrawals. Use amounts including VAT where that matches actual bank movements. The basic calculation is opening cash plus receipts less payments equals closing cash.
| Illustration | Week 1 | Week 2 |
|---|---|---|
| Opening cash | £12,000 | £11,000 |
| Receipts | £8,000 | £4,000 |
| Payments | £9,000 | £10,000 |
| Closing cash | £11,000 | £5,000 |
Separate evidence from hope
An invoice due next week is not certain cash if the customer usually pays a month late. Use payment history, disputes and current conversations to judge timing. Flag assumptions instead of hiding them inside a total.
For the cautious case, move the largest expected receipt back and reduce uncertain sales. Keep unavoidable costs in the weeks they fall due. This shows whether the business has enough room to cope with a delay.
Find the gap and choose an action
A negative closing balance is a prompt to investigate early. Options might include collecting overdue invoices, agreeing staged billing, reviewing stock purchases or discussing a payment timetable with a supplier.
If external funding is needed, compare repayment commitments against the forecast. Borrowing can bridge timing, but it does not by itself repair persistent losses. Commercial finance planning should start with the source of the gap and realistic repayment capacity.
Review it every week
Replace the completed week with actual figures, add another week at the end and explain significant differences. Otherwise the spreadsheet becomes an old prediction rather than a useful management tool.
- Compare forecast receipts with money actually collected.
- Check late invoices and agree collection responsibility.
- Update payroll, tax and supplier payment dates.
- Record changes in sales, stock and loan assumptions.
- Review the lowest forecast balance and the action needed.
- Keep a dated copy so recurring forecasting errors become visible.
Use the forecast alongside profit information
A profit and loss account and a cash forecast answer different questions. Equipment purchases, borrowing and customer credit can make a profitable period cash-poor.
For example, a growing recruitment agency might pay temporary workers weekly while waiting for client invoices. Better margin does not remove that funding interval. Review both performance and timing when deciding how quickly to grow.
Questions about this topic
Does a profitable business need a cash forecast?
Yes. Customer payment delays, stock purchases and tax dates can create cash pressure even when the accounts show a profit.
Should VAT be included in the forecast?
Use the amounts that will actually move through the bank and show VAT payments or refunds separately. Keep the method consistent to avoid double counting.
Sources & further reading
General information for UK readers, updated 3 November 2026. Examples are illustrative. Tax treatment depends on the facts and current rules; seek advice before making a decision.