Cash Flow Forecasting for Small Businesses: A Simple 90-Day Guide
Cash Flow Forecasting for Small Businesses
A Simple 90-Day Guide
Many business owners know exactly how much money is sitting in their bank account today.
Far fewer know what that balance is likely to look like three months from now.
That’s a problem.
One of the biggest differences between running a business reactively and managing it proactively is understanding where your cash is heading before you get there.
A simple cash flow forecast can help you make better decisions, reduce financial stress and avoid unpleasant surprises.
Why Your Bank Balance Doesn’t Tell the Whole Story
Your current bank balance is a snapshot.
It tells you where your business has been.
It doesn’t tell you what’s about to happen.
Over the next few months you might need to pay:
VAT
Corporation Tax
PAYE
Suppliers
Wages
Loan repayments
Rent and regular business expenses
At the same time, customer payments may arrive later than expected, or an unexpected cost may arise.
Without looking ahead, it’s easy to assume everything is fine—until it isn’t.
Why Every Business Should Have a Cash Flow Forecast
Cash flow forecasting isn’t about predicting the future perfectly.
It’s about giving yourself enough visibility to make better decisions.
A simple forecast can help you:
Spot cash shortages before they happen.
Plan for tax payments.
Decide when you can afford to invest.
Understand whether customer payments are arriving quickly enough.
Sleep better knowing what’s coming.
The earlier you identify a potential cash flow issue, the more options you have to solve it.
How to Create a Simple 90-Day Cash Flow Forecast
You don’t need specialist software.
A simple spreadsheet is often all you need.
Create four columns:
Date
Money In
Money Out
Running Bank Balance
Start with your current bank balance.
Then record the money you expect to receive over the next three months.
This might include:
Customer invoices
Regular income
Other expected receipts
Next, add the payments you know you’ll need to make, such as:
Supplier invoices
Wages
VAT
Corporation Tax
Loan repayments
Rent
Direct debits
Planned equipment purchases
Use a simple running balance formula so that each row updates your projected bank balance after every payment and receipt.
You’ll quickly see if there are any periods where cash becomes tight.
Remember—It Doesn’t Have to Be Perfect
Many business owners avoid forecasting because they worry it won’t be accurate.
It doesn’t need to be.
A simple forecast that’s reviewed regularly is far more useful than no forecast at all.
As new information becomes available, update it.
The goal isn’t perfection.
The goal is making better decisions before problems become urgent.
Cash Flow Forecasting and Making Tax Digital
As businesses move towards Making Tax Digital, maintaining accurate bookkeeping and reviewing your finances regularly will become increasingly important.
Good bookkeeping isn’t just about meeting HMRC’s requirements.
It provides the information you need to forecast cash flow, understand your business and make informed decisions.
The businesses that stay on top of their bookkeeping are usually the businesses that feel most in control of their finances.
Looking Ahead Gives You More Choices
A cash flow forecast won’t predict every challenge.
But it will give you time to respond.
Instead of reacting to cash flow problems after they’ve happened, you’ll have the opportunity to plan ahead.
That’s exactly what good financial management is about.
Need Help Managing Your Business Finances?
At Blackdown Accounting, we help businesses across Sidmouth and East Devon with:
Bookkeeping
Accounts
Cash flow forecasting
VAT Returns
Corporation Tax
Self Assessment
Making Tax Digital
Business advice and financial planning
If you’d like to understand your numbers better and make more confident business decisions, we’d be delighted to help.
📞 01395 642434
