How to Forecast Business Cash Flow: A 30-Day and Monthly Guide

Business owner reviewing a cash flow forecast

To forecast business cash flow, start with the cash in your bank today. Add the money you expect to receive on the dates it will actually arrive, not the dates you invoiced. Subtract every payment on the day it leaves, and carry the closing balance into the next period. The hard part is not the sum. It is knowing what is owed to you and what you owe, because that information sits in sent invoices and inbox bills. We built Execore so that you can copy outgoing invoices and forward incoming bills by email and get a 30-day net cash position without changing your invoicing system.

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TL;DR

A forecast is opening balance + expected receipts − expected payments = closing balance, repeated for each week or month.
Use expected payment dates, not invoice dates. Invoice dates make a forecast too optimistic.
Go weekly (13 weeks, or the next 30 days) when cash is tight. Monthly columns can hide a mid-month overdraft.
Put VAT, payroll, payments on account and annual bills in the month they leave the bank, not averaged out.
Update it every week. A forecast that is not refreshed stops being useful.

What a cash flow forecast is, and why profit is not enough
How to forecast business cash flow in four steps
A worked example: one month, week by week
Monthly forecast or 30-day forecast?
Setting up the spreadsheet
Add scenarios and warning lines
What to do when the forecast shows a shortfall
Do you need a three-way forecast?
Where Execore fits
FAQ
Sources

What a cash flow forecast is, and why profit is not enough

The British Business Bank describes a cash flow forecast as a tool for predicting the cash going out of and coming back into your business over a set period. It says the period should cover at least your cash flow cycle, and that the forecast helps you spot shortages and plan your working capital.

A forecast is not the same as a profit and loss account. A job you have completed and invoiced counts as profit, but it is not cash until the customer pays. Accountants who write about seasonal businesses make the same point: forecasting cash movements rather than relying on accounting profit shows you the pinch points earlier.

The stakes are real for small firms. The government’s Prompt Payment and Cashflow Review reported that in 2022 SMEs were owed an estimated £22,000 on average in late payments. The Federation of Small Businesses says the average small business owner spends 86 hours a year chasing late payments. A forecast built on hopeful payment dates fails for exactly this reason.

How to forecast business cash flow in four steps

Both the British Business Bank and the FSB set out the same four steps. Here is each one, with where it usually goes wrong.

Four stages of a small-business cash forecast

Step 1: choose the period and the opening balance

Pick a period at least as long as your cash flow cycle, meaning the time from paying for materials or labour to being paid by the customer. A tradesperson paid within 30 days needs at least a month. A firm on 60-day terms needs more.

Then enter your real opening balance from the latest bank statement. If the starting point is wrong, the rest of the sheet can look tidy and still tell the wrong story.

Step 2: list the income you expect, by the date it lands

This is where most forecasts break. Record sales when the cash is expected in the bank, and add non-sales income such as grants, tax refunds or royalties. Working Capital Days warns that using invoice dates instead of expected payment dates makes the forecast too optimistic. Its advice is to work from your list of unpaid invoices and the pipeline of invoices still to be sent.

In practice that means opening every unpaid invoice, checking its terms, and judging when each customer will really pay. A client who always pays 20 days late goes in 20 days late.

This is the step we take off your hands. When you Bcc your Execore address on an invoice, it is captured automatically, so your list of money owed builds itself from invoices you were already sending. Nothing about your existing invoicing workflow changes.

Step 3: list every payment, including the irregular ones

Group outgoings into manageable lines: wages, suppliers, rent and utilities, software, marketing, tax, loan repayments and drawings. Separate fixed costs from variable ones. Then add the lumpy items people forget. A UK Startup template lists these:

quarterly VAT payments
Corporation Tax, due nine months after year end
Self Assessment payments on account, 50% of last year’s bill in January and July
employer National Insurance
pension auto-enrolment contributions
annual subscriptions billed once a year

Action Accountants flags averaging as a classic trap. Annual insurance does not leave your account in smooth monthly instalments, so show it in the month it is paid.

Incoming bills are the other half of the picture. With Execore you forward supplier bills to your address and they are tracked alongside your invoices. If you pay suppliers in batches, Execore can produce an exportable payment file, so there is no bank connection to set up. Nothing is paid until you approve it.

Step 4: work out net cash flow and keep a running balance

For each period, subtract total cash out from total cash in. Add the result to the opening balance to get the closing balance, and carry that to the next period as its opening balance. The seven rows Working Capital Days uses for each week are: opening balance, cash receipts, total cash in, cash payments, total cash out, net cash flow and closing balance.

The forecast is only useful if the closing balance is compared with something. Set a minimum below which you want a warning. Nava Accountancy suggests building a reserve of one to three months of running costs in a separate savings account. Whatever buffer you choose, flag every week where the closing balance dips beneath it.

A worked example: one month, week by week

The figures below are illustrative, not drawn from a real business. A self-employed electrician starts the month with £4,200.

Week	Opening	Cash in	Cash out	Closing
1	£4,200	£1,500	£2,300 (van finance, materials, insurance)	£3,400
2	£3,400	£0	£1,100 (materials, phone, software)	£2,300
3	£2,300	£3,800 (two invoices paid)	£600	£5,500
4	£5,500	£900	£4,600 (VAT, drawings)	£1,800

On a monthly view this looks fine: £4,200 in, £1,800 out, still positive. The weekly view shows the balance falling to £1,800 in week 4 after VAT leaves. If the £3,800 slipped by two weeks, the account would go negative in week 3. A monthly column cannot show that. DataHub Pro makes the same point with an example of a business that went £8,000 overdrawn in week two while still ending the month higher than it started.

Monthly forecast or 30-day forecast?

Use both, for different jobs.

Monthly, 12 months ahead: good for seasonality, annual bills and decisions such as hiring or buying equipment. Each month starts with the previous closing balance.
Weekly or 30-day rolling: good for staying out of the red. DataHub Pro recommends moving to a 13-week forecast when your cash headroom drops below roughly three months of outgoings.

A 30-day plan from Jones Financial Accounts uses a day-by-day schedule of opening balance, inflows, outflows and closing balance, with a contingency buffer built in. Nava Accountancy suggests refreshing a rolling 13-week forecast every Monday, in about ten minutes. That habit matters more than the layout. The FSB stresses that a forecast is a living document. Revisit it after major changes in the business, when the market shifts, and ahead of seasonal swings.

If you invoice per job, as inspectors and many other trades do, the same discipline applies. There is more on managing inspection finances and getting paid on time.

Setting up the spreadsheet

A spreadsheet is a sound way to start. AccountingWEB’s guide describes the basic setup: monthly columns, an opening balance, rows for income and expenses, and formulas that total each side and carry the closing balance forward.

Three formulas do the work, as DataHub Pro explains:

Net movement = inflows − outflows
Closing balance = opening balance + net movement
Next month’s opening balance = this month’s closing balance

To keep it reliable:

Keep inputs apart from formulas. Put assumptions such as collection percentages in their own cells, so you can test what happens if collections slip by 10%, rather than hard-coding them.
Keep the layout consistent and visible. ICAEW’s guidance on good spreadsheet practice says to use consistent blocks and to avoid hiding parts of the model, because hidden rows get missed and cause mistakes.
Split receipts into sensible lines, such as cash sales and debtor collections, so a weakening stream is visible.
Model a lag for receivables and payables to avoid overstating cash.

The weak point of any spreadsheet is data entry. Every sent invoice, every paid invoice and every new bill has to be typed in, and the sheet is only as current as the last time you did it. That is the reason many owners abandon their forecast by February.

Add scenarios and warning lines

Once the base forecast works, add two more cases. Working Capital Days suggests an expected case, a best case where customers pay on time and a new contract lands, and a worst case where your largest customer pays late and a major expense arrives early. The worst case is the most useful, because it tells you the minimum cash buffer you need.

Then check the danger zone. In a 13-week view, weeks six to eight are often where a VAT bill, payroll and a slow-paying commercial customer collide, so look at those weeks first each Monday.

What to do when the forecast shows a shortfall

The British Business Bank advises dealing with a shortfall before it hits the business. Start with the levers you control, in this order.

Bring money in sooner.

Send invoices the day the work is finished.
Shorten payment terms. Nava suggests 14 days for new clients and 7 days for one-off jobs.
Accept card and Direct Debit.
Chase overdue invoices politely and consistently.

Our guide on getting paid faster covers twelve practical ways to do this.

Use the law on late payment. Under the government’s guidance, you can claim statutory interest of 8% plus the Bank of England base rate on a late business-to-business payment, plus debt recovery costs. This applies unless your contract sets a different rate. The detail is on GOV.UK. For the method, see our guides on charging interest on a late invoice and recovering unpaid invoices.

Slow money going out. Negotiate supplier terms, use Direct Debit for predictable bills, spread big purchases through the year, and move software to monthly billing if cash is tight.

Plan finance early. If the gap is structural, the British Business Bank lists extra credit, debt factoring, and selling and leasing back assets among the options. Talk to your accountant or your bank before the shortfall arrives, not after.

For the wider habit of seeing your money before it moves, read our piece on cash flow visibility.

Do you need a three-way forecast?

A three-way forecast links the profit and loss account, balance sheet and cash flow together. A small business rarely needs one for day-to-day control. It becomes relevant when a lender or buyer asks for projected balance sheets, for example with a bank loan application or the sale of a business. Ask your accountant to prepare it at that point.

Where Execore fits

Execore is an email-based tool for UK small businesses. You Bcc your unique Execore address on invoices and forward the bills you receive. From those emails it tracks what is owed to you and what you owe, and calculates your net cash position for the next 30 days. It highlights overdue debts, and drafts chase emails for overdue invoices, including statutory late-payment interest and compensation calculations. Drafts wait in a review queue, and nothing is sent or paid until you approve it.

There is no new invoicing system to adopt, no bank connection and nothing to install. The Free plan has no published price. The Business plan is £29 per month, with higher document limits and advanced automation. See the Execore plans or start from the Execore homepage.

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If you want to check where you stand on digital tax readiness too, there is a Digital Tax Check. For how invoice capture works in practice, see our invoice automation guide.

Our view: the forecast is only as good as your invoice data

We talk to many owners who build a good forecast in January and stop updating it by spring. The sums are not the problem. The problem is that the inputs live in sent invoices, inbox bills and memory.

That is why we designed Execore around email. If copying an address onto an invoice is all it takes to record it, the list of money owed stays current without a new routine. The forecast then reflects the invoices you actually sent, not the ones you remembered.

We also think control matters as much as automation. Our chase emails are drafts, and nothing goes out or gets paid until you approve it. You stay in charge of customer relationships, and you see overdue debts early enough to act before tax deadlines.

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FAQ

How far ahead should a small business forecast cash flow?

At least as far as your cash flow cycle, according to the British Business Bank. Many small businesses combine a 12-month monthly view for planning with a 30-day or 13-week weekly view for control. The further ahead you go, the less accurate the figures, so update often.

How often should I update a cash flow forecast?

Weekly is a good habit for most small businesses, and a ten-minute Monday review is enough. Also revisit it after any major change, such as a big contract, a new hire or a shift in the market.

What is the difference between a cash flow forecast and a profit and loss account?

A profit and loss account records income and costs when they are earned or incurred. A cash flow forecast records money when it enters or leaves your bank. A business can be profitable on paper and still run out of cash if customers pay late.

Can I forecast cash flow without a spreadsheet?

Yes. Execore works from emails: you Bcc invoices and forward bills, and it calculates your net cash position for the next 30 days. You can use it alongside a spreadsheet if you still want a longer monthly view.