Glossary · Accounting
Cash flow forecast
A cash flow forecast estimates the cash coming in and going out over the coming weeks or months, so you can see shortfalls before they happen.
A cash flow forecast starts from today’s bank balance, adds expected receipts and subtracts expected payments, week by week or month by month. The result shows when cash will run short and by how much.
Receipts are the hardest line to forecast, because they depend on when customers actually pay, not when invoices are due. Good forecasts use each customer’s real payment behaviour — and any promises to pay — rather than assuming everyone pays on the due date.
A 13-week rolling forecast is a common format: long enough to spot problems, short enough to be accurate.
Example
A firm’s forecast shows €30,000 coming in next week if customers pay on terms, but only €12,000 based on their history. With €25,000 of payroll due, it chases the three biggest invoices now rather than after payday.