How to Make a Cash Flow Forecast in 7 Steps (with Free Template)

This guide walks through building a forecast from a blank sheet. It takes about an hour the first time and ten minutes a week after that.

Step 1: Choose your time frame

Pick 13 weeks if cash is tight or you need to manage payroll week by week. Pick 12 months for planning and budgeting. If unsure, start monthly.

Step 2: Enter your opening balance

Use the actual balance of every business bank account today. Don’t include money customers owe you yet; that goes in cash in when it arrives.

Step 3: Forecast cash coming in

List every source and the period it will land in the bank:

• Customer payments, based on invoices sent and typical payment delay
• New sales from your pipeline, discounted for realism
• Loans, grants, investment and tax refunds

Step 4: Forecast cash going out

Start with fixed costs that never move (rent, payroll, loan repayments), then add variable costs (suppliers, stock, ads) and the lumpy ones people forget: quarterly tax, annual insurance, equipment, bonuses.

Step 5: Calculate the closing balance

For each period: opening balance + cash in − cash out = closing balance. Carry it forward as next period’s opening balance.

Step 6: Set a cash buffer and look for the low point

Decide the minimum balance you’re comfortable with, often four to eight weeks of fixed costs. Find the period with the lowest closing balance. If it falls below your buffer, act now: chase receivables, move a purchase, or arrange a credit line.

Step 7: Update it every period

Replace forecast figures with actuals as each week or month closes, note why they differed, and roll the forecast forward. This habit is what makes forecasts accurate over time.

Common mistakes

Use a template instead of building from scratch

Industry templates come with the right cash lines already in place. Find yours in templates by industry, or get every one in the bundle.