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How do I build a basic cash-flow forecast for my company?
Start with your current bank balance, then list expected cash coming in and going out by week, based on invoice due dates, payment habits, payroll, rent, tax and supplier terms. Roll it forward 13 weeks, update it weekly, and compare actual cash to the forecast so you learn where your assumptions are wrong.
Cash flow is about timing, not profit. A sale invoiced today may not be paid for 60 days, so use real customer payment patterns instead of due dates alone.
Useful practices:
- Separate certain items (payroll, rent) from uncertain ones (new sales).
- Build a base case, a pessimistic case and an optimistic case.
- Track your minimum expected balance, not just the ending balance.
A spreadsheet is often enough at first. Models help once you have many customers and enough payment history.
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