Start with cash that is actually there
Use the reconciled opening bank balance for the forecast date. Keep a note of reserved or restricted money. Sales already recorded in your books may still be unpaid, so do not start with revenue or profit.
Practical business guide
Build a cash forecast you can act on
Put expected receipts and real payment dates on one timeline so you can see a shortfall while there is time to respond.
Your result
A rolling weekly forecast, an identified low point, and one dated action for every projected shortfall.
List receipts by expected arrival date
Place each customer payment in the week you expect the money to arrive. Separate confirmed receipts from estimates and show the reason for the date. Include other expected cash, such as committed funding, separately from customer receipts. An unapproved loan or hoped-for sale is not confirmed cash.
List payments by due date
Add payroll, supplier bills, rent, subscriptions, tax payments, debt payments, inventory, equipment, and planned owner withdrawals. Include irregular expenses. Show loan proceeds and loan repayments separately from sales and operating costs. Cash planning follows the payment, even when its accounting treatment differs.
Roll the balance forward
For each week: closing cash = opening cash + cash received − cash paid. The closing balance becomes the next opening balance. Use 13 weeks as a practical starting view, then extend it to cover seasonal commitments. Choose a minimum cash buffer based on your obligations; it is a planning threshold, not a universal rule.
Test one believable delay
Move a large customer payment to a later week and recalculate. Also consider a quieter sales period or an unavoidable repair. Write down the first week that falls below your buffer, the amount needed, and the deadline to act. A positive final balance can hide an earlier cash shortage.
Assign actions and update each week
Check overdue invoices, confirm payment dates, correct billing errors, review optional purchases, and discuss timing changes with suppliers before changing agreed terms. Record the owner and date for each action. Replace forecasts with actual receipts and payments weekly, explain differences, and add another week. If essential obligations may go unpaid, get qualified help early.
See the method
Worked example: a delayed invoice
Hypothetical example in USD; only four weeks are shown for readability.
A small service business opens with $5,000. It chooses a $2,000 minimum planning buffer. Its base forecast assumes a $2,500 invoice arrives in week 2.
| Cash movement | Week 1 | Week 2 | Week 3 | Week 4 |
|---|---|---|---|---|
| Opening cash (base) | $5,000 | $3,000 | $1,500 | $2,000 |
| Receipts (base) | $2,000 | $4,000 | $3,000 | $5,000 |
| Payments | $4,000 | $5,500 | $2,500 | $3,500 |
| Closing cash (base) | $3,000 | $1,500 | $2,000 | $3,500 |
| Receipts if $2,500 is delayed | $2,000 | $1,500 | $3,000 | $7,500 |
| Closing cash if invoice is delayed | $3,000 | −$1,000 | −$500 | $3,500 |
The base forecast misses the chosen buffer by $500 in week 2. If the invoice moves from week 2 to week 4, the business is $1,000 short of paying everything in week 2; reaching its $2,000 buffer would require a $3,000 improvement by then. Both cases end week 4 at $3,500, so the ending balance alone hides the timing problem.
What this example leaves out: A negative forecast is an unfunded shortfall, not permission to overdraw. Moving a payment later changes timing, not profit or the obligation to pay.
Work on your business
Your weekly cash sheet
Notes stay in this page until you download them or choose to take them into planning. Do not include customer, account, or confidential details.
Done when: Opening cash reconciles, receipts and payments have dates, every low point is visible, and each forecast gap has an owner and a dated response. Revisit uncertain receipts until they resolve.
Common mistakes to avoid
- Recording an invoice as cash before the money arrives.
- Leaving out quarterly, annual, tax, debt, or owner payments.
- Counting the same cash twice when transferring between your own accounts.
- Assuming all customers will pay on time.
- Checking only the final balance instead of each week.
Sources and scope
These sources support the methods and factual notes. Examples and suggested tests are Business.How teaching scenarios. Australian government resources are used for general operating methods; local tax and legal rules vary.
Bookkeeping, cash versus accrual timing, and responsibilities for receivables, payables, and bank reconciliation.
Opening and closing balances, timing of cash in and out, and a downloadable forecast template.
Payment terms, invoicing, inventory, and regular forecast-versus-actual review.
Further learning materials covering cash flow and financial management.