As a business owner you’ve got a lot to worry about. Projects need to be completed on time and within budget.

Feb 9, 2018 · 7 min read

Client expectations. Competitors. You don’t need more confusion in your life. You need simple and effective tools that work. That’s why I am excited to share a simple cash flow tool you can use to hack your business.

Here is one tool that I consider to be a game changer for your business: A Cash Flow Forecast.

What Makes Up A Cash Flow Forecast?

The cash flow forecast is a simple concept: How much cash will your business have in the upcoming week? Month? Next couple of months?

Beginning Cash Balance

This is your starting point. The rest of your forecast will build off of this number.

Cash Inflows

Cash inflows are simply the different ways cash comes into your business. The good news is the list is pretty common across all industries so it’s straightforward.

Sources of Cash

  • Projected Sales- Sales which are projected to produce cash as a result of the sale. For example, if you’ve just signed on a client and they give you a retainer to start. This number is forecasted. You need to have an understanding of your sales pipeline to get this number (this is beyond the scope of this post).
  • Accounts Receivable- Invoices you’ve already sent out and are waiting to collect on. Your accounting system should tell you which ones are coming due this week.
  • Loans/Lines of Credit- Bank lines of credit and any loans coming in.
  • Equity Contributions- Money you or someone else puts into the business as investment.
  • Other- Misc items that do not fall into the above categories.

Cash Outflows

The cash outflows (or cash disbursements) are simply the items which will have a cash outflow effect on your business. These are usually more predictable than your inflows.

Uses of Cash

  • Payroll and payroll taxes- This is usually the largest expense in your business. If you’ve got salary employees this can be very predictable. How are they paid? Bi-Weekly, Semi-monthly? Simply fill out the spreadsheet with the payroll dates in mind. If they are hourly you can estimate based on history.
  • Rent- Usually another big expense. This one generally occurs at the same time every month.
  • Insurance- Renewed each year, this expense is known ahead of time and predictable.
  • Taxes- These include any large taxes owed to city, state, or federal. You can add categories under this if you have specific ones that are large, for example sales tax.
  • Capital Purchases- large purchase items for your business typical for investment in the future of your business. Items like furniture and fixtures, equipment, and software are examples.
  • Other Expenses- The rest of the smaller expenses can be lumped together in this category.

It’s Time To Start Using This To Predict Cash Flow

The main purpose of this tool is to get a handle on your cash in the near term. Each business is unique in the way it generates cash and uses it. This tool helps you to get better at predicting and managing this process.

Review Your Cash Weekly

Here’s where the tool becomes extremely useful. At the end of each week, sit down and compare what happened to what you thought was going to happen.

Make Adjustments and Repeat Weekly

You’ve filled out your forecast and started to review weekly. Great! Now you can begin to tweak your forecast.


Building out a cash forecast for your business is an excellent way to understand how it gets and uses cash.

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