Free cash flow forecast
Profitable businesses don't fail because they weren't profitable. They fail because money went out three weeks before it came in.
12-week cash flow
[Your name / business]
Starting week commencing [DD/MM/YYYY]
Opening balance
£[0.00]
Money in
| Who | What for | Expected date | Amount |
|---|---|---|---|
| [Client / platform] | [Invoice 0001] | [DD/MM] | £[0.00] |
| [ ] | [ ] | [DD/MM] | £[0.00] |
| [ ] | [ ] | [DD/MM] | £[0.00] |
Money out
| Who | What for | Due date | Amount |
|---|---|---|---|
| [Supplier] | [Stock] | [DD/MM] | £[0.00] |
| [Landlord / platform / software] | [Recurring] | [DD/MM] | £[0.00] |
| HMRC | [Tax / VAT] | [DD/MM] | £[0.00] |
| You | [Drawings / salary] | [DD/MM] | £[0.00] |
Week by week
| Week | In | Out | Closing balance |
|---|---|---|---|
| W1 [DD/MM] | £[0] | £[0] | £[0] |
| W2 | £[0] | £[0] | £[0] |
| W3 | £[0] | £[0] | £[0] |
| W4 | £[0] | £[0] | £[0] |
| …through W12 | £[0] | £[0] | £[0] |
Lowest point £[0.00] in week [0]
The number this is really for
Not the closing balance at week 12, but the lowest point anywhere in the twelve weeks. That's the moment the business is most likely to break, and it's usually somewhere in the middle where nobody was looking.
If your lowest point is negative, you have found a problem while it's still eight weeks away and solvable: chase an invoice early, delay a stock order by a fortnight, ask a supplier for 30 days instead of 14. If you find the same problem on the morning it lands, your options are a loan or an emergency.
Forecast when money moves, not when it's earned
This is the difference between cash flow and profit, and it's the entire point of the exercise. An invoice raised on 1 March with 30-day terms is March's profit, but it isn't cash until April, and only if they pay on time.
So date every row by when the money actually lands or leaves. And be pessimistic about money in: put clients down for the date they usually pay, not the date on your invoice. If a client has taken 45 days three times running, they are a 45-day client, whatever the terms say.
The four things people leave out
- Tax. The Self Assessment bill due 31 January, and the payment on account due the same day and again on 31 July. These are the biggest predictable outflows most sole traders have, and the easiest to leave off a forecast.
- VAT. If you're registered, the VAT you've collected was never yours. It sits in your account looking like money.
- Paying yourself. A forecast where you take nothing out is not a forecast of a business you can run.
- Annual charges. Insurance, subscriptions, accountancy fees. They land once a year, which is exactly why they get forgotten.
Twelve weeks, updated weekly
Twelve weeks is far enough ahead to act on and close enough to guess accurately. Longer forecasts are mostly fiction. Roll it forward one week at a time, replacing the guess for the week just gone with what really happened. That habit also teaches you how wrong your guesses tend to be, which is its own useful number.
Doing it by hand is fine, and doing it from records that are already current is faster. Sedonis keeps what you're owed, what you owe and what's actually been paid in one private place, so the forecast starts from real figures. Free to start.
Related: what cash flow means, chasing an unpaid invoice, and the one-page business plan.
Next steps
Read the guide
fills this in for you, tracks who's paid, and keeps every client and number in one private app. Free to start.
A free template for general use, not financial advice. A forecast is a set of assumptions, and the useful part is checking them against what happens.