Cash-flow forecast template

What a cash-flow forecast is — and what it is not

A cash-flow forecast tracks the movement of actual cash into and out of a bank account over a defined period. It is not the same as a profit and loss account: revenue is recognised when the invoice is paid, not when it is raised; an asset purchase appears as a single cash outflow, not depreciated over years.

This distinction matters because a profitable business can run out of cash. Late-paying customers, a large VAT bill, or a lumpy capex commitment can all create a shortfall that does not appear in reported profit. The forecast makes these gaps visible weeks or months in advance, giving directors time to act.

Structure of the monthly forecast

Use the following row structure for each month column:

• Opening bank balance — closing balance from the previous month
• Cash receipts: customer payments, director loans in, grant receipts, asset disposals
• Total receipts
• Cash payments: supplier invoices, payroll and PAYE/NIC, rent and service charges, loan repayments, VAT and corporation tax, capex, director drawings
• Total payments
• Net cash movement (receipts minus payments)
• Closing bank balance

Highlight any month where the closing balance is negative — these are the periods your lender or adviser will focus on. Illustrative figures are not a quote or projection of actual performance; apply your own trading assumptions.

Receipts: timing assumptions

The most common forecasting error is assuming customers pay on invoice date. Use your actual debtor days: if your average collection period is 45 days, receipts in month two should reflect invoices raised in month one. Review your credit control checklist to tighten collection before finalising timing assumptions.

Separate recurring revenue (retainers, subscriptions, standing orders) from project-based income, which is inherently less predictable. Flag large individual receipts rather than blending them into a monthly average — a single expected payment of material size warrants its own row and a note on probability.

Payments: do not omit irregular items

Annual or quarterly payments are regularly omitted from monthly forecasts and then come as a surprise. Before finalising the payments section, check:

• VAT quarters — typically due one month after the quarter end
• Corporation tax — due nine months and one day after year end for small companies
• Annual insurance renewals
• Annual software licence fees
• Loan balloon payments or facility review dates
• Seasonal stock or raw material purchasing

If you operate with an overdraft or revolving credit facility, include the drawn balance and available headroom as a separate section below the closing balance row.

Using the forecast to support a loan application

When submitting to a commercial lender, accompany the forecast with a brief assumptions note: how receipts were timed, what growth rate was applied, and what the base case versus downside scenarios look like. Lenders apply their own stress tests; showing you have already considered a downside builds credibility.

Pair the cash-flow forecast with the business loan application checklist to ensure the document sits alongside the other materials a lender needs to reach a decision.